3 ms·

Well said. It reminds me of all the bluster I hear from people about how they are "100% sure" that "FB is definitely overvalued at $80B" or "AMD is certainly un

by whack 10y ago

Well said. It reminds me of all the bluster I hear from people about how they are "100% sure" that "FB is definitely overvalued at $80B" or "AMD is certainly undervalued at $5B" and yet, they never seem to back up their certainty with the actual act of buying or shorting the stock in question. When it comes to financial markets, anyone who doesn't put their money where their mouth is, should be completely and utterly ignored.

forgetsusername 10y ago
>yet, they never seem to back up their certainty with the actual act of buying or shorting the stock in question Most of the vehemence is in regards to privately held companies which can't directly be shorted. In fact, that may actually contribute to the odds of the company being overvalued.
bigmanwalter 10y ago
"Markets can remain irrational longer than you can remain solvent." - John Maynard Keynes
- tynpeddler 10y ago
  But nobody was insolvent. That quote sounds like it's more suited to catastrophes than to run of the mill equities acquisitions.
cortesoft 10y ago
Not having access to capital does not mean that you can't be right about a company's valuation.
- whack 10y ago
  Most of the people I've met who talk about how "FB is definitely overvalued" do have some amount of capital. They could safely short FB with X% of their portfolio if they are really so sure, and yet, they never do so.
cturner 10y ago
I strongly agree in general, but there are risks to acting on your urge even if you turn out to be right: > is definitely overvalued at $80B" Stocks move in bizarre ways, particularly tech stocks. If you short a stock and time it wrong, you can easily be right about the fundamentals but get killed by the herd in the meantime. Going long is safer, but can still be bad. If the price drops below your buy-in, and a merger is agreed at the low price, you can be forced to sell low. You could have bought into Dell, and then been forced to sell lower than your own valuation.
superbatfish 10y ago
It sounds like these people did put their money where their mouth was. They owned the stock. If you think the market is over-valuing a stock you hold, you sell it. If you think it's worth more, then you keep it, and refuse any offers to purchase it for less than you think it's worth. These people tried to refuse the offer. As mentioned in the footnotes, only those who voted against the deal were entitled to sue for compensation.
- whack 10y ago
  I somewhat agree with you. My comment is more to the general point of people who don't buy/short any shares at all, and not specifically to people being forced to sell during buyouts.

by whack 10y ago

forgetsusername 10y ago

>yet, they never seem to back up their certainty with the actual act of buying or shorting the stock in question Most of the vehemence is in regards to privately held companies which can't directly be shorted. In fact, that may actually contribute to the odds of the company being overvalued.

bigmanwalter 10y ago

"Markets can remain irrational longer than you can remain solvent." - John Maynard Keynes

tynpeddler 10y ago
But nobody was insolvent. That quote sounds like it's more suited to catastrophes than to run of the mill equities acquisitions.

cortesoft 10y ago

Not having access to capital does not mean that you can't be right about a company's valuation.

whack 10y ago
Most of the people I've met who talk about how "FB is definitely overvalued" do have some amount of capital. They could safely short FB with X% of their portfolio if they are really so sure, and yet, they never do so.

cturner 10y ago

I strongly agree in general, but there are risks to acting on your urge even if you turn out to be right: > is definitely overvalued at $80B" Stocks move in bizarre ways, particularly tech stocks. If you short a stock and time it wrong, you can easily be right about the fundamentals but get killed by the herd in the meantime. Going long is safer, but can still be bad. If the price drops below your buy-in, and a merger is agreed at the low price, you can be forced to sell low. You could have bought into Dell, and then been forced to sell lower than your own valuation.

superbatfish 10y ago

It sounds like these people did put their money where their mouth was. They owned the stock. If you think the market is over-valuing a stock you hold, you sell it. If you think it's worth more, then you keep it, and refuse any offers to purchase it for less than you think it's worth. These people tried to refuse the offer. As mentioned in the footnotes, only those who voted against the deal were entitled to sue for compensation.

whack 10y ago
I somewhat agree with you. My comment is more to the general point of people who don't buy/short any shares at all, and not specifically to people being forced to sell during buyouts.