5 ms·

Wow, this is awesome - a podcast with a full transcript attached! At first glance I hadn't planned on listening to this, but I am certainly willing to skim the

Wow, this is awesome - a podcast with a full transcript attached! At first glance I hadn't planned on listening to this, but I am certainly willing to skim the transcript. Updated: Some very interesting stuff in here. A few poignant quotes from Grantham: "But in my opinion, we are clearly beginning to run out of resources, cheap, plentiful resources." - on the primary reason for inflation. "The stimulus program was so gigantic that it flooded into the AMCs and the meme stocks and and helped push this market into the levels that we have seen. And the speculations this time are much the biggest in the history of the stock market adjusted for the size of the GDP." "[QuantumScape] sells last December--the December before last of 2020--at $130 a share, $55 billion market cap, bigger than GM for a battery research enterprise four years away from any sales, forget profits. Now, there is nothing of that scale in 1929. There's Pet.com with scores of millions, tens of millions, in one or two cases, hundreds of millions. This is $55 billion for a company that has no earnings for four years, no sales. And AMC multiplied by 40, 50 times in a month and becomes, in the case of the other one, GameStop, becomes by far the largest company in the Russell 2000, over 10% of its total, I think, market cap. This is just exceptional craziness." It strikes me that Grantham is a classic rationalist, a very old school guy who is used to the way the markets have functioned for the past 100 years. However, he just doesn't really seem to GET the change in investing. Meme stocks, cryptos, etc. We live in an irrational, emotion driven market more now than ever before, and I hate to say it, but these old timers don't seem to get the picture and will probably get burned.

iamthemonster 5y ago
It's an old cliché but the market can stay irrational longer than individuals can stay solvent. Insisting on investing in accordance with fundamentals instead of riding the wave of irrationality could be a losing strategy this year, next year, even for a decade. And some rational investors will get burned. But for investors attempting to ride the wave of irrationality, betting on pictures of apes and shitcoins, some will also get burned. I just can't see our current situation perpetuating forever - it amounts to unregulated gambling and stocks having 95% of their value associated with "some other mug will pay even more for it later" rather than "the company will distribute some profits". An economy will not prosper if capital ends up randomly allocated. So rationality will come back, but I don't think any individual investor can bet on when.
- uejfiweun 5y ago
  It's an interesting time, because for the vast majority of the population, people actually WANT a situation where "capital ends up randomly allocated" - it's because most people have very few prospects in life, unfortunately. If you don't believe you have any chance of improving your status, why the hell not bet a bunch of money on bored apes and GME? As long as people continue to throw money at these things, the madness will continue. Even if the vast majority of them are scams, they are wrapped in such pervasive marketing that I'm not sure exactly how to convince people that this stuff is bullshit.
  - iamthemonster 5y ago
    It's interesting psychologically. I could go and bet my whole life savings on red on the roulette wheel, but the odds are completely explicit and I can at least trust the casino not to bend the truth on how roulette works. But my family and friends would think I'm an idiot for making such a reckless bet. But if I go down a rabbit hole on social media with thousands of users creating a convincing and self-reinforcing narrative that Fartcoins are going to the moon, then I can spend my life savings on Fartcoins and convince myself it's a sound investment. Who is at fault here? Who do you regulate to stop people losing their life savings?
    - ostenning 5y ago
      I think its becoming increasingly common knowledge that most of crypto is just a giant “decentralised” casino. People are getting burnt all the time, word spreads and i don't believe retail will keep pumping money into it
      - hackerfromthefu 5y ago
        But from what I've seen the news regularly reports sensational individual stories of wins, I've never seen an article saying this person tried crypto and it didn't go anywhere. There are reports of hacks, lost wallets etc but that is different.
AmericanBlarney 5y ago
You were so close to getting there - he is a rationalist and, purely my personal opinion, the markets have been behaving irrationally for several years (I would say even the Trump years of fiscal manipulation to pump the markets). Where I think you're off base is that, while markets can stay irrational for extended periods of years (and have before), eventually people realize the emperor has no clothes and there's always a reckoning at some point.
- uejfiweun 5y ago
  I hope you're right, and I really mean that, because I have personally made a large bet that the stock market peaked in Dec / Jan. However, I am an eternal pessimist, so I kind of assume my bet won't pay off and this new meme stock bubble economy is ACTUALLY the new normal. God I hope you're right.
  - greenie_beans 5y ago
    Lol, so pessimistic that you don’t think your pessimistic bet will pay off. Damn, relatable.
  - hackernewds 5y ago
    This took me on a rollercoaster of meta-pessimism
Zanfa 5y ago
> It strikes me that Grantham is a classic rationalist, a very old school guy who is used to the way the markets have functioned for the past 100 years. However, he just doesn't really seem to GET the change in investing. Meme stocks, cryptos, etc. We live in an irrational, emotion driven market more now than ever before, and I hate to say it, but these old timers don't seem to get the picture and will probably get burned. "This time it's different" is a recurring slogan that has preceded every major market crash since at least early 20th century. I tried reading Security Analysis (first published 1934) by Benjamin Graham and honestly, it just gets depressing after you realize how the irrationality cycle just keeps repeating.
- hackernewds 5y ago
  it's ironic you respond to mix narratives citing a 1934 book to bolster your argument for how history should repeat itself

iamthemonster 5y ago

It's an old cliché but the market can stay irrational longer than individuals can stay solvent. Insisting on investing in accordance with fundamentals instead of riding the wave of irrationality could be a losing strategy this year, next year, even for a decade. And some rational investors will get burned. But for investors attempting to ride the wave of irrationality, betting on pictures of apes and shitcoins, some will also get burned. I just can't see our current situation perpetuating forever - it amounts to unregulated gambling and stocks having 95% of their value associated with "some other mug will pay even more for it later" rather than "the company will distribute some profits". An economy will not prosper if capital ends up randomly allocated. So rationality will come back, but I don't think any individual investor can bet on when.

uejfiweun 5y ago
It's an interesting time, because for the vast majority of the population, people actually WANT a situation where "capital ends up randomly allocated" - it's because most people have very few prospects in life, unfortunately. If you don't believe you have any chance of improving your status, why the hell not bet a bunch of money on bored apes and GME? As long as people continue to throw money at these things, the madness will continue. Even if the vast majority of them are scams, they are wrapped in such pervasive marketing that I'm not sure exactly how to convince people that this stuff is bullshit.
- iamthemonster 5y ago
  It's interesting psychologically. I could go and bet my whole life savings on red on the roulette wheel, but the odds are completely explicit and I can at least trust the casino not to bend the truth on how roulette works. But my family and friends would think I'm an idiot for making such a reckless bet. But if I go down a rabbit hole on social media with thousands of users creating a convincing and self-reinforcing narrative that Fartcoins are going to the moon, then I can spend my life savings on Fartcoins and convince myself it's a sound investment. Who is at fault here? Who do you regulate to stop people losing their life savings?
  - ostenning 5y ago
    I think its becoming increasingly common knowledge that most of crypto is just a giant “decentralised” casino. People are getting burnt all the time, word spreads and i don't believe retail will keep pumping money into it
    - hackerfromthefu 5y ago
      But from what I've seen the news regularly reports sensational individual stories of wins, I've never seen an article saying this person tried crypto and it didn't go anywhere. There are reports of hacks, lost wallets etc but that is different.

AmericanBlarney 5y ago

You were so close to getting there - he is a rationalist and, purely my personal opinion, the markets have been behaving irrationally for several years (I would say even the Trump years of fiscal manipulation to pump the markets). Where I think you're off base is that, while markets can stay irrational for extended periods of years (and have before), eventually people realize the emperor has no clothes and there's always a reckoning at some point.

uejfiweun 5y ago
I hope you're right, and I really mean that, because I have personally made a large bet that the stock market peaked in Dec / Jan. However, I am an eternal pessimist, so I kind of assume my bet won't pay off and this new meme stock bubble economy is ACTUALLY the new normal. God I hope you're right.
- greenie_beans 5y ago
  Lol, so pessimistic that you don’t think your pessimistic bet will pay off. Damn, relatable.
- hackernewds 5y ago
  This took me on a rollercoaster of meta-pessimism

Zanfa 5y ago

> It strikes me that Grantham is a classic rationalist, a very old school guy who is used to the way the markets have functioned for the past 100 years. However, he just doesn't really seem to GET the change in investing. Meme stocks, cryptos, etc. We live in an irrational, emotion driven market more now than ever before, and I hate to say it, but these old timers don't seem to get the picture and will probably get burned. "This time it's different" is a recurring slogan that has preceded every major market crash since at least early 20th century. I tried reading Security Analysis (first published 1934) by Benjamin Graham and honestly, it just gets depressing after you realize how the irrationality cycle just keeps repeating.

hackernewds 5y ago
it's ironic you respond to mix narratives citing a 1934 book to bolster your argument for how history should repeat itself