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Too much attitude, not enough substance in this piece. It does little to actually fulfill the promise of the title in a way that hasn't been done hundreds of ti
by aazaa 6y ago
Too much attitude, not enough substance in this piece. It does little to actually fulfill the promise of the title in a way that hasn't been done hundreds of times already.
Number go up, so people buy. Number will go down. Don't enter a burning building. Don't try to catch a falling knife.
Yes, we all know that.
Assets go through periods of being overvalued all the time. There's a big difference between that and a bubble.
Nor does the author even mention the main difference between Tesla and Bitcoin. Tesla is a company and there are tested traditions of valuation that generally hold over time such as price to earnings ratio.
Bitcoin has no earnings. It's more like a currency or gold. Therefore, valuation is more challenging, but still possible given some work. Had that work been done, some actionable conclusions might be drawn.
- matz1 6y agoOk how about instead of Bitcoin, we compare it with CSCO ? It was bubble back then and the value never recover.
- MrPowers 6y agoCSCO is a better comparison and Siegel analyzed its valuation back in March 2000: https://www.wsj.com/articles/SB952997047343478041 https://www.wsj.com/articles/SB952997047343478041 Someone should use Siegel's thought framework with 2020 tech company numbers.
- jkhdigital 6y ago> Had that work been done, some actionable conclusions might be drawn. The work was done, and it was irrelevant, just like with Tesla. Sure, we have really straightforward models for stock valuation, so you can do things like say "Tesla will need to return $X over the next Y years to justify this valuation at a discount rate of Z%" but that doesn't mean the particular values of X, Y and Z are even remotely reasonable. A bubble is when asset valuation is completely unmoored from fundamentals--the "greater fool" theory dominates market behavior. At the height of the 2017 Bitcoin bubble, there were plenty who would tell you with a straight face that the fundamentals justified the valuation--this is going to be a new global reserve currency! Later price action seem to indicate that they were gravely mistaken, but why is Tesla any different right now? Just because the valuation model is easier to understand doesn't mean one's assumptions about input variables aren't completely insane.