Hello friends, my name is Jack Raines. I will be writing on Alpha’s platform once a week. I also write a newsletter, Young Money, where I cover all things investing, finance, and careers. You can check it out here. Hope you guys enjoy today’s piece!
Ah, shades of 2000. My broker used a highly rated money manager. As I watched the explosion of dots with no earnings and projected P/E of 25 or more, I was nervous. I suggested backing off as things just kept rising. I was told you can't bet against market momentum, the technicals are great, the new world is coming and you are winning. Except the market shuddered as they ran out of new fools. Selling into a declining market is never for the faint of heart and I suffered a lot.
So I see Tesla at a valuation exceeding all autos combined! That cannot be possible no matter how smart Musk is. I'm not going to short them either because I have no way to tell if we have run out of fools. Apple and Microsoft may also be worth their valuations but I'm not likely to live long enough to collect those gains. My portfolio is tolerably solid, keeping up with the market but not by much but has always been steady as the market declines. No more dots, please.
In the history of investing, every technology becomes a commodity. Trains, auto manufacturers, airlines, computer builders. All started out as exciting, new, life-altering technologies. And they all end up as a commodity as most of the new companies go out of business, merge into larger, more unscrupulous competitors. You're right about TSLA, they'll continue to be more profitable, but the valuations will likely contract over time.
Everything that you wrote about Bitcoin is correct and my thinking is very similar. Here are a couple of thoughts to ponder: 1) What if Bitcoin had come first and become the standard/accepted currency, then fiat currency was introduced (let's say 10 years ago)? How would the argument look? 2) What if a country or group of people had a clean slate and Bitcoin and fiat currency were introduced simultaneously? How would that look? It's my belief, that fiat currency would fall flat and never gain a foothold. If this is true, it makes a very persuasive argument for Bitcoin that it's been able to gain a foothold in the face of incredible opposition. This is only my opinion. In full disclosure, I've done well in cryptocurrencies. However, my reasoning is a unstated version of one of your points. I'm shorting the US Government.
Exceptional, Jack. I’ve been trying to explain this to my grown children. Sadly, I’ve discovered “giving them a start” was not the best for them. They’ve never looked back and their businesses continue to flourish. I’m sure there’ll be a big fall soon. That’s ok, I’ll help the grandkids get star….
My First Casino Experience
Ah, shades of 2000. My broker used a highly rated money manager. As I watched the explosion of dots with no earnings and projected P/E of 25 or more, I was nervous. I suggested backing off as things just kept rising. I was told you can't bet against market momentum, the technicals are great, the new world is coming and you are winning. Except the market shuddered as they ran out of new fools. Selling into a declining market is never for the faint of heart and I suffered a lot.
So I see Tesla at a valuation exceeding all autos combined! That cannot be possible no matter how smart Musk is. I'm not going to short them either because I have no way to tell if we have run out of fools. Apple and Microsoft may also be worth their valuations but I'm not likely to live long enough to collect those gains. My portfolio is tolerably solid, keeping up with the market but not by much but has always been steady as the market declines. No more dots, please.
Good writing. Enjoyed this!
Love how you kept looping that roulette chart to anchor the concept.
We all love getting fooled by randomness and telling ourselves its our "genius" that caused it all.
Fantastic article Jack! Well done.
In the history of investing, every technology becomes a commodity. Trains, auto manufacturers, airlines, computer builders. All started out as exciting, new, life-altering technologies. And they all end up as a commodity as most of the new companies go out of business, merge into larger, more unscrupulous competitors. You're right about TSLA, they'll continue to be more profitable, but the valuations will likely contract over time.
RV Lee shorts the US Government, would you short the Chinese Government?
My first casino movie was “Casino” which is a bit different in tone than The Hangover but it made me wish the mob still ran the casinos.
Everything that you wrote about Bitcoin is correct and my thinking is very similar. Here are a couple of thoughts to ponder: 1) What if Bitcoin had come first and become the standard/accepted currency, then fiat currency was introduced (let's say 10 years ago)? How would the argument look? 2) What if a country or group of people had a clean slate and Bitcoin and fiat currency were introduced simultaneously? How would that look? It's my belief, that fiat currency would fall flat and never gain a foothold. If this is true, it makes a very persuasive argument for Bitcoin that it's been able to gain a foothold in the face of incredible opposition. This is only my opinion. In full disclosure, I've done well in cryptocurrencies. However, my reasoning is a unstated version of one of your points. I'm shorting the US Government.
Exceptional, Jack. I’ve been trying to explain this to my grown children. Sadly, I’ve discovered “giving them a start” was not the best for them. They’ve never looked back and their businesses continue to flourish. I’m sure there’ll be a big fall soon. That’s ok, I’ll help the grandkids get star….