Front-Running Collective Irrationality

Front-Running Collective Irrationality

I have to tell you: What interests me isn't always what "sells" for the financial media or for sites that seek to monetize various manifestations of hysteria. On weekends, I often delve into theory and venture into political philosophy, sometimes bolstered on that journey by guest posts like Saturday's "Rage Kapital." As much as it may make sense for most portals to eschew meaningful analysis in favor of ready-made content crafted to appease an American public that would sooner inject bleach t
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9 thoughts on “Front-Running Collective Irrationality

  1. The storm of articles that I have read regarding the IPO phenomenon have mostly been pointing out the obvious danger, not how “things are different this time”. Market tops are not announced by fearful headlines. They are marked by optimistic headlines.

    1. Your selection of sources might be non-representative. I can find ample signs of people stopping to worry because the Fed will save them (in their view). We’re certainly not at peak ignorance yet though.

  2. “…my raison d’être is to deliver daily missives that matter.”

    Of course, what helps the missives matter is that they are read. It’s a “tree falls in the forest” kind of thing. Sure, Google analytics will count page loads but I’m here to say you are coming through loud and clear.

    Big thumbs up for all you do!

  3. DoorDash has a market cap of $55.59 Billion and it delivers your burrito bowl. Moderna develops vaccines that save lives and its valued at $63 Billion. Yes, it’s stupid and it appears it does not matter…..yet.

    1. OK but seriously?

      A farmer feeds you, a pop singer might entertain you for 5 minutes. Wanna bet on who’s got the bigger paycheck?

      A better analysis would include Revenues/EBITDA/profit margins, if you want to make the case that DoorDash is irrationally priced (something I would gladly agree on)

      1. I value digging into the data as much as anyone, but as a marketing guy I appreciate pithy memorable expression. For me, the DoorDash/Modena comparison encapsulates the irrationality of the moment better than all the charts and tables one might muster.

        And we all know what the master said about irrationality and markets.

  4. Buying future cash flows at a decent discount rate tends to work over time. So figure out the market size, the sustainable competitive advantages, the cost structure, etc and use a sensible return assumption based on the risk and see if it makes sense as an investment. Playing the hot potato emotion game is a lot tougher for some of us then just using basic fundamental analysis.

    The great advantage of the individual investor is they do not have to swing at every pitch.

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