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These are uncharted territories for sure. I’m not sure if it’s a bubble though. The valuations, even though gobsmacking and ridiculous, are grounded in some rea

These are uncharted territories for sure. I’m not sure if it’s a bubble though. The valuations, even though gobsmacking and ridiculous, are grounded in some reality. For example, Nvidia’s PE ratio has actually improved. The stock is technically cheaper now than it was before. Assuming of course that it is able to keep performing at the same level. Something I am hugely skeptical about that. I have a working theory (unfinished and likely has faults): The automation of decision making in trading is the reason behind this. Which is also why I feel a repeat of 2000 will be unlikely as fewer humans are involved directly in the loop. Things are going to seem more plausible now, as the algorithms ensure that by looking at hundreds of signals before making buy/sell decisions. Our guts may be picking up on something uncanny that has not been accounted for in the algorithms yet. Only time will tell what that is.

boshalfoshal 3y ago
There aren't a lot of market makers or automated trading firms throwing around several hundred billions on a single stock. These types of strategies usually don't scale well with size. Thats usually flows from hedge funds, family funds, pensions and large banks. And more retail presence in trading is playing a part in that too. Typically most of the things I described are not automated, though there might be more data science involved nowadays than say 30 years ago. You can probably confirm this yourself by looking at nvidias largest shareholders. I don't think Citadel or 2sigma is just sitting on tons of nvidia.