Venture Capital Gone Mad

Discussion in 'Economics' started by Stockolio, Mar 16, 2019.

  1. sle


    Good stuff, agree with most of the points in this one. There is so much FOMO in the venture space (sadly, you can't short any of these companies until they float an IPO)
  2. Some valuations are non sense, for companies that are just running through cash... This is the hidden aspect that scares some about the coming downturn, the hit it's gonna produce on Pension Funds that have been feeding into this mania... Uber valued at 72 Billion, Wework 48 Billion ? On paper in a bull market it looks good to everyone, in a bear market and a healthy dose of economic reality coming back, paper assets will be a fraction of what it was initially paid for
  3. Nobert


    Stock, this is out off topic, but do you honestly care what happens with the pensions of those who do not care for themselfs ?

    Great example of Pereto Distribution,

    just a minority of millenials whom i know, are investing for retirement.

    Even that i share, the ''mirricle" of compound interest with them, few decides to do something.
    ( theres a lack of moral authority from my side as well, to influence/persuade them )


    theres few if none, when it comes to content quality of videos, that this channel shares, -thanks.
    _eug_ likes this.
  4. sle


    It's PAreto Distribution :D

    Of course you do. If people can't eat, they rebel (either outright or via democratic mechanism) and that never ends well.
    Nobert likes this.
  5. Nobert


    thank you, always got it wrong, probobly has to do something with P/E

    I absolutely agree & not just for the rational reasons, but empathetic aspects as well.

    Just the tiny part of damn eqo, is thinking, ,, Hey , that's their own foult ''

    The theme of chasing gains and coming up short has been consistent for U.S.-based pension fund managers. Over the last decade, fund managers who oversee the pensions of the nation’s teachers, firefighters, police and other government workers have bet on investment strategies that have cost U.S. taxpayers at least $600 billion, possibly more than $1 trillion, in underperformance and fees, investment data and calculations by Yahoo Finance found.

    Historically, because public pensions are guaranteed, the underperformance of funds doesn’t hurt retiring pensioners but instead hits taxpayers in the form of budget cuts for schools, hospitals and libraries and decreased spending on infrastructure, health care and other public projects.

    Any time a part of the portfolio drops and it impacts returns, the longer-term consequences for the state is they’ve either got to increase taxpayer contribution for the funds or decrease benefits or make the employees pay in it more,” said Jeff Hooke, a lecturer at Johns Hopkins University who studies pension fund investment.
  7. sle


    Indeed. I was merely saying that even if you exclude the emotional component, the rational approach is to care. It's a complex trade-off, of course (let's define it broadly as social inequality, beyond "not having money to retire"). Not caring about extreme social inequality could lead to rebellion. Caring about it too much could lead to moral hazard and loss of productivity.

    It is indeed their own fault and we should be trying to figure out ways to incentivize people to invest for retirement instead of spending it short-term. Of course, that would mean reducing current consumptions so there are no politicians that are truly interested.
    Nobert likes this.
  8. sle


    There is, of course, a strong recency bias in this study - we are coming off a decade when investing into equities has been the only game in town. If they had taken the prior decade, from 1998 to 2008, the results of the same asset mix would have done very differently. A prudent manager (not that every pension fund is prudent, by any means :D) would be right to diversify away from stocks and bonds into alternative assets.

    FWIW, it's the same problem that plagues a lot of "just index it" and "bonds plus stocks" studies. For example, risk parity and bond/stock correlation. We are coming off a relatively long-term bull run in the bond market (thank you Volker for crushing inflation) and we are also been a recipient of the central bank policy that pulled on the bond yields to prop up stocks. On the other hand, there were multiple stretches of time when bonds and stocks where positively correlated. It's unclear what the right approach is. You can say "this time is different" and there are good reasons to think so in many cases. It's also possible that this is blip before the reversion to mean.
  9. Nobert


    One of the few reasons, keeping their interest away, would be, labels of socialist and many, many others (?)

    still, in your opinion, have you got any figures in US politics, that could pull out such project & succeed ?

    p.s sorry for going off topic
    #10     Mar 17, 2019