4 ms·

Google stock rallied 5% ish the after the demo (though the stock didn’t move immediately). Then it gave back about 1% once the news broke that it was faked

godelski 3y ago
That's not a great answer. We need to know the counterfactual question of "How much would google's stock have rallied after a realistic demo was given?" I would not have been surprised if the answer was also 5%. Almost certainly Google's stock would have risen after announcing Gemini. There are other long term questions too like about how this feeds into growing dissent against Google and trust. But what the stock did is only a small part of a much bigger and far more important question. Edit: Can someone explain the downvotes? Is there a error in my response? I'm glad to learn but I'd appreciate a bit better feedback signal so that I can do so better instead of guessing.
- nextworddev 3y ago
  Broad investor community was spooked by Gemini Ga being delayed to Q1 so this stunt was a good stop gap / distraction
  - yellow_postit 3y ago
    And likely caused more long term harm since if they had to fake this they’re likely further behind
    - pixl97 3y ago
      That's tomorrows problem, not todays. They are hoping to solve the issue by then, or find a new way to fake it another quarter.
      - nostrademons 3y ago
        Also pretty critically it moves the reckoning past the Q4/Q1 boundary, where annual budgets and performance reviews are being decided. That could be the difference between layoffs vs. hiring in your department, between departures vs. high morale, or between re-orgs vs. continued productivity. If you can fake it for an extra couple weeks, it might mean getting another year of continued funding, and with an extra year of continued funding you might just deliver what you originally promised.
        nextworddev 3y ago
        Haha, this is the right Realpolitik interpretation for sure
- dkga 3y ago
  Economist here who studies exactly this type of counterfactual analysis. You are completely right: the effect of Gemini can only be estimated if we factor in what the Alphabet stock price would have been in the same time but in a world without Gemini. This is actually very standard in financial economics. This type of effect can be calculated with econometric techniques that compare before/after for “treated” vs “untreated” units, but in instances such as these, where only one or a few units were affected, like Alphabet stock amongst hundreds of other companies, one could use techniques such as “synthetic controls”. The intuition is to use other companies’ data to estimate before Gemini how Alphabet stock prices move over time, and then use that relationship to estimate a post-Gemini version of no-Gemini Google. The difference between the actual stock price and that counterfactual is the effect of interest; whether it is a significant effect or just random noise can be established by a number of auxiliary statistical tests. For more info, see [0]. [0] Abadie, A. (2021). Using synthetic controls: Feasibility, data requirements, and methodological aspects. Journal of Economic Literature, 59(2), 391-425.
  - godelski 3y ago
    Well I don't mean with/without Gemini, I mean without the deceptive marketing of Gemini vs had they counterfactually produced a non-deceptive marketing. Other than that nitpicking, I appreciate the backup and the source. Counterfactual testing is by no means easy, so good luck with your work! My gf is an economist but on the macro side. You guys have it tough. I'm a bit confused why people are disliking my comment but mostly that they are doing so without explanation lol.
- hnfong 3y ago
  > I would not have been surprised if the answer was also 5% Given the sensitivity of the market with any company perceived to be lagging behind AI developments, I wouldn't be surprised that their stock price would drop by a couple % if the demo underwhelmed. So the whole thing is basically a ethical question of "how far can we go with polishing our demo until it becomes an unacceptable fake?" In an ideal world you'd never want to be caught in such a dilemma.
lolinder 3y ago
One question I've long had is why short-term changes in stock prices seem to matter so much to companies like these. Is it just that the short-term changes are seen as harbingers of longer-term trends, or is there a concrete reason to play games to get temporary boosts to stock price?
- YetAnotherNick 3y ago
  Short term changes definitely affect medium to long terms' price. Because at one level stock price is more like casino and isn't actually related to the company's performance. e.g. See the 5 year history of gamestop. Its price once increased due to random activity from redditors and its stock price is still increased due to that.
- godelski 3y ago
  I've been using the term Goodhart's Hell to describe what I see as a system of metric hacking and shortsightedness. I do think there's systems encouraging people to meet metrics for metrics sake but not stopping to understand the metric or what it actually measures, and most importantly, how that differs from the actual goals. Because all metrics are proxies and far from complete, even for things that sound really simple. I think this is because we've gotten so good at measuring that we've innately forgotten about the noisiness of the system where when we weren't good at measuring that was just forced upon us in a clear manner. But I really don't get it either. One of the things that really sets humans apart from other animals is our capacity to perform long term planning and prediction. Why abandon that skill instead of exploiting it to its maximum potential?
- barbarr 3y ago
  A CEO's/company's job is to maximize instantaneous shareholder value. Anything else is a waste of time, since investors are assumed to take long-term vs short-term risk preference into their own hands. The company is essentially a machine that investors can dip into and dip out of at any time, so it doesn't make sense to make decisions to move the stock price over a pre-planned certain time horizon. The reason companies invest in any long-term projects at all is because the net present value of those projects affects the stock price.

godelski 3y ago

That's not a great answer. We need to know the counterfactual question of "How much would google's stock have rallied after a realistic demo was given?" I would not have been surprised if the answer was also 5%. Almost certainly Google's stock would have risen after announcing Gemini. There are other long term questions too like about how this feeds into growing dissent against Google and trust. But what the stock did is only a small part of a much bigger and far more important question. Edit: Can someone explain the downvotes? Is there a error in my response? I'm glad to learn but I'd appreciate a bit better feedback signal so that I can do so better instead of guessing.

nextworddev 3y ago
Broad investor community was spooked by Gemini Ga being delayed to Q1 so this stunt was a good stop gap / distraction
- yellow_postit 3y ago
  And likely caused more long term harm since if they had to fake this they’re likely further behind
  - pixl97 3y ago
    That's tomorrows problem, not todays. They are hoping to solve the issue by then, or find a new way to fake it another quarter.
    - nostrademons 3y ago
      Also pretty critically it moves the reckoning past the Q4/Q1 boundary, where annual budgets and performance reviews are being decided. That could be the difference between layoffs vs. hiring in your department, between departures vs. high morale, or between re-orgs vs. continued productivity. If you can fake it for an extra couple weeks, it might mean getting another year of continued funding, and with an extra year of continued funding you might just deliver what you originally promised.
      - nextworddev 3y ago
        Haha, this is the right Realpolitik interpretation for sure
dkga 3y ago
Economist here who studies exactly this type of counterfactual analysis. You are completely right: the effect of Gemini can only be estimated if we factor in what the Alphabet stock price would have been in the same time but in a world without Gemini. This is actually very standard in financial economics. This type of effect can be calculated with econometric techniques that compare before/after for “treated” vs “untreated” units, but in instances such as these, where only one or a few units were affected, like Alphabet stock amongst hundreds of other companies, one could use techniques such as “synthetic controls”. The intuition is to use other companies’ data to estimate before Gemini how Alphabet stock prices move over time, and then use that relationship to estimate a post-Gemini version of no-Gemini Google. The difference between the actual stock price and that counterfactual is the effect of interest; whether it is a significant effect or just random noise can be established by a number of auxiliary statistical tests. For more info, see [0]. [0] Abadie, A. (2021). Using synthetic controls: Feasibility, data requirements, and methodological aspects. Journal of Economic Literature, 59(2), 391-425.
- godelski 3y ago
  Well I don't mean with/without Gemini, I mean without the deceptive marketing of Gemini vs had they counterfactually produced a non-deceptive marketing. Other than that nitpicking, I appreciate the backup and the source. Counterfactual testing is by no means easy, so good luck with your work! My gf is an economist but on the macro side. You guys have it tough. I'm a bit confused why people are disliking my comment but mostly that they are doing so without explanation lol.
hnfong 3y ago
> I would not have been surprised if the answer was also 5% Given the sensitivity of the market with any company perceived to be lagging behind AI developments, I wouldn't be surprised that their stock price would drop by a couple % if the demo underwhelmed. So the whole thing is basically a ethical question of "how far can we go with polishing our demo until it becomes an unacceptable fake?" In an ideal world you'd never want to be caught in such a dilemma.

lolinder 3y ago

One question I've long had is why short-term changes in stock prices seem to matter so much to companies like these. Is it just that the short-term changes are seen as harbingers of longer-term trends, or is there a concrete reason to play games to get temporary boosts to stock price?

YetAnotherNick 3y ago
Short term changes definitely affect medium to long terms' price. Because at one level stock price is more like casino and isn't actually related to the company's performance. e.g. See the 5 year history of gamestop. Its price once increased due to random activity from redditors and its stock price is still increased due to that.
godelski 3y ago
I've been using the term Goodhart's Hell to describe what I see as a system of metric hacking and shortsightedness. I do think there's systems encouraging people to meet metrics for metrics sake but not stopping to understand the metric or what it actually measures, and most importantly, how that differs from the actual goals. Because all metrics are proxies and far from complete, even for things that sound really simple. I think this is because we've gotten so good at measuring that we've innately forgotten about the noisiness of the system where when we weren't good at measuring that was just forced upon us in a clear manner. But I really don't get it either. One of the things that really sets humans apart from other animals is our capacity to perform long term planning and prediction. Why abandon that skill instead of exploiting it to its maximum potential?
barbarr 3y ago
A CEO's/company's job is to maximize instantaneous shareholder value. Anything else is a waste of time, since investors are assumed to take long-term vs short-term risk preference into their own hands. The company is essentially a machine that investors can dip into and dip out of at any time, so it doesn't make sense to make decisions to move the stock price over a pre-planned certain time horizon. The reason companies invest in any long-term projects at all is because the net present value of those projects affects the stock price.