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It would be more interesting if he could talk about how to take advantage of a bubble

by devanti 13y ago

Afforess 13y ago
That's easy. Keep plenty of liquidity, buy undervalued assets post-crash.
- hackula1 13y ago
  Exactly. People seem to think that you make money by riding a bubble to the top, then jumping off when the timing is right at its peak. Turns out that is a great way to lose money (nobody jumps off fast enough). The real money is made cleaning up after a disaster.
- logicallee 13y ago
  That's one strategy. Plenty of liquidity means (literally) that you're rich. So your strategy is 1) be rich 2) buy undervalued assets post-crash. Your strategy is okay. For those set of assumptions I suggest you remove the second step, which might significantly reduce your being rich. So, 1) Keep plenty of liquidty. Buy nothing pre- or post-crash. This has a very high probability of keeping you rich. Now on to us mere mortals. In bubble times did you know you can actually start a company with like a few hundred dollars, start delivering product and getting users, and get investment to accelerate the process? That way, you can build a company with cheap capital even if you're not already "plenty liquid", as you might put it.
MarkTanamil 13y ago
Short Facebook.
- hamburglar 13y ago
  Shorting stocks during a bubble is a great way to learn about bounded upside and unbounded downside. I guess in some sense a valuable learning experience is "taking advantage."
- BenoitEssiambre 13y ago
  Nah Facebook is old and mature, not bubble material. Short the exciting and new Tesla!
  - logicallee 13y ago
    EDIT: Let me rephrase. I think it's silly to call Facebook "old and mature" when it IPO'd 18 months ago. It makes it sound like you would have had a shorting strategy for it some time ago, perhaps 18 months ago - which might have failed miserably - but now would sweep that under the rug, pretending to have never had it. Of course, we can all be clairvoyant if we sweep our losses (FB is up 27% versus IPO opening price) under the rug. Shorting as a strategy works wonders if you ignore when it doesn't.
    - BenoitEssiambre 13y ago
      Feeling edgy? I think someone is holding a bit too much TSLA. My investment strategy is low cost index funds. I'm not about to start playing in that casino.
qznc 13y ago
Maybe "Hollywood Accounting"? Create some fake startups which take in the cheap capital. Funnel it to a safe haven by making the fake startups buy overpriced services from safe-haven-company. Once the bubble busts the should be a lot of cash in the safe haven to buy now undervalued assets and maybe even work hire the now unemployed engineers.

It would be more interesting if he could talk about how to take advantage of a bubble

by devanti 13y ago

It would be more interesting if he could talk about how to take advantage of a bubble

Afforess 13y ago

That's easy. Keep plenty of liquidity, buy undervalued assets post-crash.

hackula1 13y ago
Exactly. People seem to think that you make money by riding a bubble to the top, then jumping off when the timing is right at its peak. Turns out that is a great way to lose money (nobody jumps off fast enough). The real money is made cleaning up after a disaster.
logicallee 13y ago
That's one strategy. Plenty of liquidity means (literally) that you're rich. So your strategy is 1) be rich 2) buy undervalued assets post-crash. Your strategy is okay. For those set of assumptions I suggest you remove the second step, which might significantly reduce your being rich. So, 1) Keep plenty of liquidty. Buy nothing pre- or post-crash. This has a very high probability of keeping you rich. Now on to us mere mortals. In bubble times did you know you can actually start a company with like a few hundred dollars, start delivering product and getting users, and get investment to accelerate the process? That way, you can build a company with cheap capital even if you're not already "plenty liquid", as you might put it.

MarkTanamil 13y ago

Short Facebook.

hamburglar 13y ago
Shorting stocks during a bubble is a great way to learn about bounded upside and unbounded downside. I guess in some sense a valuable learning experience is "taking advantage."
BenoitEssiambre 13y ago
Nah Facebook is old and mature, not bubble material. Short the exciting and new Tesla!
- logicallee 13y ago
  EDIT: Let me rephrase. I think it's silly to call Facebook "old and mature" when it IPO'd 18 months ago. It makes it sound like you would have had a shorting strategy for it some time ago, perhaps 18 months ago - which might have failed miserably - but now would sweep that under the rug, pretending to have never had it. Of course, we can all be clairvoyant if we sweep our losses (FB is up 27% versus IPO opening price) under the rug. Shorting as a strategy works wonders if you ignore when it doesn't.
  - BenoitEssiambre 13y ago
    Feeling edgy? I think someone is holding a bit too much TSLA. My investment strategy is low cost index funds. I'm not about to start playing in that casino.

qznc 13y ago

Maybe "Hollywood Accounting"? Create some fake startups which take in the cheap capital. Funnel it to a safe haven by making the fake startups buy overpriced services from safe-haven-company. Once the bubble busts the should be a lot of cash in the safe haven to buy now undervalued assets and maybe even work hire the now unemployed engineers.