I’m responding to a post that said you could call the entire US stock market a “pump and dump”.
And an important lesson of the stock market that is now accepted wisdom is that the stock market can stay irrational longer than you can stay solvent. This is probably true to some extent with stuff like NFTs, so I generally just don’t engage there. If I think that it’s bound to crash, I am as likely to be wrong as right over shorter time horizons. If I think that it’s actually the New New Thing and will be high and increasing forever, I can’t rely on recent strong performance to support that view.
Market agnosticism is a power tool to stay sane and avoid stepping on investment landmines, IMO.
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I’ve stayed out of the crypto thread since my latest battle royale with everyone, and don’t intend on going back in for a while unless some new news comes out.
But it’s funny that I’ve been repeatedly called out in that thread by various posters for wanting to discuss crypto/NFTs in a negative light in the crypto/NFT thread. By that logic only positive things about stonks should be allowed in this thread.
Some of them are pump and dumps like Rivian or Gamestop. Some are fake money making schemes like Uber, Doordash, and Airbnb. Some commit massive fraud like mortgage companies in the 2000s. Some exploit monopolies to back predatory behavior like Facebook and Amazon. Others are just standard fossil fuel and bomb-making operations. And some I assume are good people.
Investing in any of these subjects you to HFT front running, order flow manipulation, or casino-style vig on bid/ask options spreads. Vast insider trading by everyone from politicians to friends of execs means retail investors will always get the worst price possible. The reason why everyone preaches index investing is that the the deck is so heavily stacked against any normal person who wants to actively participate in this market. And in the black swan event of retail traders having a success story, they’ll just ban you from buying the stock the way that Robinhood did last year until banks and hedge funds can strategize and regroup.
So yea I stand by my characeterization.
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Notice how you said “the entire US stock market” and then when pressed on it all you could do was name a few companies?
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I listed many of the biggest companies as well as their CEOs, but also notice what kind of conclusions people draw of the entire crypto market after finding 1 or 2 stories on twitter.
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Yes, I can confirm that you did name some companies as well as their CEOs.
It seems pretty ridiculous to say there’s no difference between investing in a profit-making enterprise and speculating on the future price of collectible tokens. I’m not hating on folks flipping apes, but this is silly.
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Let me ask you a question while we’re here. A stock’s price is the expected value of all future earnings. So every stock in the SPY including their potential growth should already be priced in. Yet the expectation is that SPY will go up by 5-10% per year. What is the mechanism for this?
Because individual company growth isn’t a sure thing and has huge error bars, but by making a lot of small wagers, the risk goes down. This is basic stuff.
I’m not saying there’s no difference, I’m saying attacking crypto as “rampant fraud run by scumbags” while heavily advocating investing in the stock market is silly.
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I mean, my total NFT exposure is like ~$1K because I have been dealing with other shit and can’t get the time to learn about them and am somewhat hesitant even though I see value in the area… But they clearly have long-term applications and will be used by major corporations in a variety of ways, the most obvious being ticketing.
Now, does investing in jpegs necessarily reap a return on that? No, probably not, but investing in the underlying crypto that NFTs end up being minted on probably will.
Are baseball cards a scam? No, not really, though there were some scams involved in the baseball card boom of the 90s. They’re “just pieces of cardboard” but some are worth a lot of money.
NFTs can also be digital bling. People pay more than they should for everything from sneakers to clothes to cars to jewelry to show off their money. As we spend more and more of our lives online on social media, why wouldn’t we expect people to spend money to bling out their social media accounts?
Last but not least, while a lot of these projects likely suck and end up worthless, some can end up being truly appreciated as art. If you bought 100,000 paintings made between 1900 and 1920, you’d buy a lot of worthless shit. But if you snagged a Picasso, you’d probably end up crushing it regardless. It’s probably going to end up something like that, except with a current boom/bubble in prices, people are either freerolling it by flipping like 75% of their stuff, or trying to pick jpegs that they think are most likely to hold their value/appreciate.
There are obviously some talented artists putting stuff out there, and basically everything else has moved online over time, so why shouldn’t valuable art?
So like yeah 95-99% of the NFTs being minted are probably going to ~zero, but if the 1 in 100 or so that are actually worth something appreciate enough it can be a good investment.
The net expectation should average out to 0 not 5-10%.
Not if the whole economy grows, no. Your premise that a stock price is some omniscient window into future earnings is obviously false.
It sure seems like that’s impression you’re trying to give us. Like investing is all just speculation on meme stock flipping and therefore no different from buying ape jpgs.
Yeah they are fantastic. Just hope you don’t need anything customer service wise. In a word they are shit at that.
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Kinda, yea? Not @ing you here, just taking this a step further. In a simplistic sense, the goal of any investment is to receive more money over time than you originally paid for the investment. With a stock, that could come in the form of dividends (increasingly rare, it seems) or it could come when you sell the stock to someone else (most common). There’s always another person at the other end of your transaction. Are you dumping on them? Or do you just have different perceptions of the future value of that stock?
NFTs do have some utility, mostly as digital bling as CW put it. Is the current valuation of most NFTs way out of line with that utility? Almost certainly. But as long as there’s a willing buyer on the other side of the transaction, why does it matter? You buy an NFT if you think its value will increase. You sell an NFT when you think its value will decrease. Someone else may disagree.
I’d rather spend some money on a JPG than invest it in Tesla or something.
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They also have two things working for them… Car demand is through the roof, and it’s probably pretty hard to find a used Tesla since they are so new.
So the real question is in like 3-5 years when the car market settles back into equilibrium and Tesla’s can be bought used, what will their new sales look like?
In 2019, GM led all manufacturers with 2.8M vehicles sold. So let’s say Tesla gets to 3M, which would make it the biggest manufacturer in the world despite (as far as I know) not having any trucks in the line. It looks like they’re at about 1.2M annual sales now (just based off the results in the last quarter and an article that said they’re roughly unchanged over the last year), so that’s 2.5xing. Their most recent earnings were $2.86. So $2.86 x 4 x 2.5 = $28.60.
At a P/E of 15, it’d be worth $429 a share. So it would drop another 45% to get to that. That seems like the high end of a reasonable valuation to me, the low end is probably more like $215 a share. The peak was $1,243, so the total drop would be 66% to 83% from the peak. Sounds reasonable to me.
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Sure, I think an asset that yields dividends or interest is a different kettle of fish from buying silver coins and hoping the price goes up. I don’t think that’s a crazy take. This is not to say you can’t speculate on stocks like GameStop, but I think that’s fundamentally different from value investing in companies because you think they’re going to turn a profit. It feels reductive to say it’s all just the same thing.