Here are some words of wisdom from Andy Kessler in the Wall Street Journal:
Joby Aviation, which plans to begin an electric air taxi service in 2024, is worth more than Lufthansa, EasyJet or JetBlue. Does that seem right? In this market, why not? Heck, earlier this year, Tesla was worth more than the next nine car manufacturers combined, though now only the next six. Beyond Meat, made with pea protein, is worth more than the entire market for peas eaten globally—like the bumper sticker says: Imagine whirled peas. Do fundamentals even matter?
I can go on. Used-car sales platform Carvana is worth more than Volvo, Honda, Ford or Hyundai. Airbnb is worth more than Marriott and Hilton combined. Crypto-exchange Coinbase is worth more than the Nasdaq. I live at the intersection of innovation and disruption, but when companies are worth more than any possible reality, watch out.
Fundamentals haven’t mattered for a long time. All that matters are how much money is flying around and whether there’s a greater fool out there who has some of that money.
In1999, Jeff Bezos was interviewed by 60 minutes, his fledgling company was worth more than Burlington Northern Railroad, even he laughed.
I don’t know, but the high valuations suggest to me high risk tolerance.
Hopefully investors are aware of the risk.
Tesla, bitcoin, and many others smell like Ponzi schemes. You might be better off buying gold metal and hiding it somewhere. Or maybe silver metal.
Someone (Woodpile Report? [RIP]) suggested .22 LR cartridges for small change and large cartridges for paper replacement. They would be barter. Actually, in today’s ammo shortage, buying large quantities of ammo 10 years ago would have given you a return like the stock market’s.
The market is always right Dave. (Eventually.)
Steve
1929 or 1932?
“I live at the intersection of innovation and disruption, but when companies are worth more than any possible reality, watch out.â€
That’s the insightful line. “… Are worth more than any possible reality…’ is basically a dot.com notion. Correct for so many instances, but not all. And “…the intersection of innovation and disruption….†Is a nod to what is really going on. There are crazed, woke, and stupid business models. Fads, really. And then there are well considered bets on disruptive business models.
Grey has the insight and starts down the path. Yes, its certainly risk tolerance, but he acknowledges the notion of an “accredited investor.†Do your own homework on that legal term.
Ive made mention of this before. I’m sure it was ignored. There are actually only a handful of business models. The common thread in the airline and auto references is that they are commodity businesses; hence they are a low cost producer business model, with niche marketing aspects sprinkled (very) lightly around.
Joby is a new tech model I am dubious of. OK, I think its nuts. Ultra, ultra niche. Carvana is a skip the middle man model that, perhaps, has better prospects. Perhaps.
Dave – people have the right to be stupid. We see it everyday. You need to be concerned when the government starts plowing money into this shit, or funding losses, which they do quite often.
I see see Steve is just masturbating in his ideological sewer.
Of all those, Tesla at least is developing technology and making a product. Their valuation still seems outlandish, but they’ve got such a huge tech lead and are still innovating. In many ways, they remind me of what Apple used to be.
Hasn’t the Federal Reserve been doing that for years?