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The implication is that bubbles require optimistic groupthink. I.e., if everyone thinks it's a good time to buy, then it's a bubble. Sama's point is that becau
by CyrusL 11y ago
The implication is that bubbles require optimistic groupthink. I.e., if everyone thinks it's a good time to buy, then it's a bubble.
Sama's point is that because so many people are saying tech stocks are expensive then there isn't the mass delusion required for a bubble.
- nilkn 11y agoThanks for clarifying that sentence -- I was confused by it as well, but this viewpoint makes sense.
- denniskane 11y agoWow, okay... the first sentence reads so straightforwardly and the following one is like some kind of reverse judo takedown maneuver. The essential point is to correctly interpret who exactly the "no one" in question is referring to.
- nailer 11y agoLiterally nobody. Sam is saying most people think tech valuations are expensive, i.e., they are overpriced.
- AnimalMuppet 11y agoNot quite. There's a difference between an overpriced market and a bubble. A market can be overpriced when the consensus view is that stocks are more valuable than is actually realistic. When more sober judgment sets in, stocks go down to more appropriate levels. In contrast, a bubble is when stocks are going up, and so everybody wants to buy stocks because they're going up, and so stocks continue to go up because everybody's buying them, and so people continue to want to buy them because they're going up. It's not a bubble until you get that positive feedback going.
- exstudent2 11y agoIf you think the value will continue to rise, then the price you pay now is "cheap" compared to the future value. It's a really weird way to phrase it though. I agree with your point about "cheap" being used more traditionally in that an investor may think the price they're paying is high compared to what the stock price should be based on fundamental analysis. That situation isn't the same as a bubble (although it might happen in a bubble).