I'm not sure what I'm seeing is that reasoned. The analysts I speak with give 'moron' a bad name. They're just blindly repeating what they somehow intuit the zeitgeist is, not even realizing (or caring if there's any capability of such) the consequences of their actions. The likes of my management, so proud of their Google and Microsoft pedigrees, just follow slavishly, in fear of (a) the stock price falling due to bad commentary if they don't submit and (b) being found out that their pedigrees reflect no knowledge of any kind of real business.
I totally get the feeling behind this, but you can't blame market participants for taking actions that are rational, regardless if the overall market fundamentals are/seem to be irrational.
If the market is desperate for returns, and tech equities are one of the few remaining avenues for such returns, and you are the owner of those equities, what else would you expect to occur? "No no no, don't buy these valuable shares of my company, invest elsewhere!" No way, you're going to cash out as fast as possible before your gains evaporate when the market transitions.
It’s amazing to me that otherwise smart people can’t see this. Maybe there’s a fog of war thing going on when it comes to the equity markets because I imagine many would question the exact same behavior coming from a sports handicapper or race track tout but don’t see it with the Cramers of the world.
Using words like "moron" is pretty strong. There are a large number of historical precedents to back up that belief.
Ignoring well-known examples like Amazon (which even today trades well above where it "should"[1]), there are other examples like "The Globe", which had a first-day gain of 249%[2]
More recently, Splunk popped 83%[3].
He addressed the there would have been buyers the past two days thing, too: It never stood a shot. If there was any enthusiasm for this deal, that got wiped out. Think about a guy who was going to put five grand on this. You go to Vegas and put $5,000 on the roulette wheel and it breaks, it's like, hold on, I'm not going to do that. Suddenly you're like this is Wall Street and I hate Wall Street.
Huh. Do you think investors are happy with how it turned out? Is there any significant interest group that's happy with how it turned out? If not, I'd have a hard time calling that smart.
I get that the people with power may have maximized their personal short-term financial outcomes. Which is certainly one way to define smart. But it strikes me as a very narrow one.
Look at Bezos, for example. He's spent the last couple of decades mostly ignoring what investors wants on a quarterly basis. And Amazon's gone from strength to strength because of it. If AOL's execs were smart, then that makes Bezos stupid. If that's the case, I guess I'd rather be dumb.
Do these guys realize the stupidity of their own comments and still do it to con the public/investors OR do they really genuinely believe in this bullshittery ?
I would counter with the fact that humans ignore - either by their own accord, or through the unjustified belief that things will continue to be the way they were - the views that do not support the narrative they decided is true or they deem unlikely.
Case in point, who in their right mind thought a bunch of self proclaimed smooth brains would hold and not panic against ladder attacks and FUDs? The smooth brains have been in the game as much, they have seen their capital dropping to 0 more than the HedgeFunds are accustomed to losing at their own game.
A hedge fund with capital and influence, capable of controlling the narrative, could and tried to decide the outcome of their bet based on their bet, we saw this with TSLA as well. They believed, like most people, that GME would go bankrupt, they didn't consider the bull case [1] because things had been going down for so long, but GME's revenue is periodic, bringing us back to the fallacy. Things are how they are until they are not, and the inability to adapt due to logical fallacies becomes evident. There's a reason why reasonable people in WSB suggest an investor should know both cases by heart, if you can not afford to control the narrative, you can not direct the behavior of the market.
Help me understand what you're trying to say with that middle paragraph, about how "shocking" it is that people on Wall St. are reluctant to have behavior called out? To what behavior are you referring?
I'll add: on Twitter you noted that virtually every HFT trader, lawyer, and quant pushed back (either to your definition or to your allusion to Lewis's unfortunate book). You seem to think that's added credibility for your argument. Isn't a near-universal rejection of that argument from subject matter experts sort of damning for the position you're trying to take?
Well said. Though given the stupidity of their examples, I would not bet on these guys to write any winning trades any time soon. Better to cry foul and scam a few buy-siders into buying their snake oil.
The thing is I don’t think investors got deluded, I think investors new exactly what they’re doing. They were hoping some greater fool would take the investment off their hands
I can't help but facepalm that people are genuinely encouraging one another to buy a stock that is so obviously overvalued, and then hold it at that price as long as possible...
there are not many guarantees in trading, but that is a guarantee to lose money. and because it's under the guise of "sticking it to the man" people have become even less rational about their money.
so when the stock eventually corrects to where it belongs for a dying retailer selling physical media in the digital age... I can only imagine the millions "surprised pikachu face" that will ensue
"But then weird things started to happen. Hertz’s stock, which is literally worthless, starts to go up. And up. And up. It gets bid up a whole 500% over a 3-day period last week. What is going on?"
This phenomenon is not unique to the recent RobinHood millennials with extra cash and extra money who are bored. There is a tone of condescension against an entire generation of millennials painting them uniquely as jack-asses (the author even uses Jackass to make the point).
Here are some facts.
If a stock like HTZ plummets from $20 to 50 cents in a matter of days, the volatility is so great that when the stock spends a few days at the bottom, a few cents up can be seen as strange. Except it's not. Very few people have the intution to appreciate that percentage returns are a function of the price. If a stock gets hit by 90%, it requires 10 times its value to recover the loss. That is 1000 percent!
This has happened since the earliest days of stock trading. Here is an example with Enron:
Yeah, it's their job. What's your point? Are they actually doing it? Signs point to no.
But maybe the real problem is that most of today's shareholders will be gone by then, too. They benefit from juicing the stock and selling high, leaving the cost for some other sucker down the road. They have no incentive to find uncomfortable truths either. I think short-term ownership is one of the roots of a lot of today's economic ills.
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