If the ONLY reason you're buying into something is for the chance someone else MIGHT buy it from you at a higher price - it's probably not a great idea.
We're obsessed with watching prices instead of understanding inherent value.
Pump & dump stocks, novelty crypto coins, pyramid schemes are all a massive game of musical chairs.
Just remember, if you aren't the person controlling the music - there's always a chance you will be out of a chair.
Just remember, if you aren't the person controlling the music - there's always a chance you will be out of a chair.
I fucking hate cliché quotes but this is still a solid one
"price is what you pay, value is what you get" - Seafood Buffet
"price is what you pay, value is what you get" - Seafood Buffet
Of course the dislocation between valuations and fundamentals have never been wider...
As long as there's liquidity, relentless stimulus and insatiable retail demand, the gap won't close
When it inevitably closes, that's the moment of truth
Expect MANY paper hands
As long as there's liquidity, relentless stimulus and insatiable retail demand, the gap won't close
When it inevitably closes, that's the moment of truth
Expect MANY paper hands
Another perfect example of how price is dislocated to value?
M&A
Steep acquisition premia, heavy post integration costs & slower than projected growth result in these massive intangibles + write-downs
Slam dunk value accretive deals are an exception rather than the norm
M&A
Steep acquisition premia, heavy post integration costs & slower than projected growth result in these massive intangibles + write-downs
Slam dunk value accretive deals are an exception rather than the norm
If realising a valuation is the oxygen, liquidity is the blood carrying it.
You can buy a NFT for $50m, great! If the market for re-sale isn't liquid or nobody else sees the value... you're stuck.
Cue penny stocks.... and houses!
Just ask Steve Cohen
google.com/amp/s/www.busi…
You can buy a NFT for $50m, great! If the market for re-sale isn't liquid or nobody else sees the value... you're stuck.
Cue penny stocks.... and houses!
Just ask Steve Cohen
google.com/amp/s/www.busi…
If there's only one thing I could share with you after years of valuing companies for IPO, countless M&A deals and right sizing capital market issuances
.... if you truly know what goes in the engine room of determining prices, you would place considerably less reliance on them
.... if you truly know what goes in the engine room of determining prices, you would place considerably less reliance on them
Valuation is definitely more art than science.
Sensitivities also matter. A 50bp hike into your cost of equity? Ah, wipe out $200m of value. Margin compression? Wipe out another $50m. One less turn on the EBITDA multiple? There goes $80m.
Anything can be massaged.
Sensitivities also matter. A 50bp hike into your cost of equity? Ah, wipe out $200m of value. Margin compression? Wipe out another $50m. One less turn on the EBITDA multiple? There goes $80m.
Anything can be massaged.
My all time favourite example of a disconnect between prices and value?
Diamonds
Thanks to a glossy De Beers marketing campaign, compounded by market manipulation through a monopoly
... many people STILL believe diamonds are more valuable than they actually are.
Diamonds
Thanks to a glossy De Beers marketing campaign, compounded by market manipulation through a monopoly
... many people STILL believe diamonds are more valuable than they actually are.
Bringing back this thread seeing as many guys took gut punches on Doge this weekend
https://twitter.com/iamkoshiek/status/1360258388521811971?s=19
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