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When there's nothing interesting to be said about a subject, there's a really strong selection bias for only un-insightful things to be said about the subject.
by jdm2212 7y ago
When there's nothing interesting to be said about a subject, there's a really strong selection bias for only un-insightful things to be said about the subject.
Like, no one's gonna write a whole medium post about "Companies with crappy business models get low valuations. Companies with good business models get better valuations"...
- jfengel 7y agoIt would actually be a refreshing change for companies with bad business models to get worse valuations. Valuation is hard, and the article's whole fascination with IPO's is about the idea that the people setting the initial price will find out how wrong they were on the first day. There's a fetish for being hoping they were lowballing, and people rush in to pay more, such that the lucky first in line make a big score in a few hours. Even if people pay attention to fundamentals, it's tricky. It's not unreasonable for a company to try to raise money before they turn a profit. But so many people turn it into kabbala, dismissing any notion that the returns are related to the company's future earnings, instead looking to the runes to guess what other people's guesses are going to be.