Lol maddest thing I've read all day
"priced in"
I smell your efficient market hypothesis argument, before you even begin just keep in mind that does not apply here, it's an IPO, the price is not set by the secondary market
Even so, I'm not a fan of EMH
> Lol maddest thing I've read all day
didn't someone like the WSJ to a long term experiment picking a basket of stocks by throwing darts at the paper? They beat most/all established funds over 5 years or something like that. I don't think it matter much, i just buy VOO when i get my bonus and go back to living my life. That strategy is on track to put two kids through college.
Regarding the stock picking experiment, yes, there have been many similar experiments. The premise is just pick a random basket of stocks and see how it performs over decades. Indeed those have outperformed cap-weighted the indexes, most of the time.
How? If you pick a random basket of stocks, you'll end up with mostly small-cap stocks. Cap-weighted indexes are heavily driven by a few large stocks. Most years, small-cap outperforms large-cap (Fama-French 5-factor model[1]). So the "monkey picks stocks" experiment is actually just an exercise in harvesting what is called the "size premium".
Since the AI boom, large-cap has been significantly outperforming small-cap, so if you run the same "monkey picks stocks" experiment, it would likely underperform most of the time.
If you want to easily visualize this, just go on TradingView and compare SPY (cap-weighted S&500) with RSP (equal-weighted S&P500).
[1] https://www.quantt.co.uk/resources/fama-french-model-explain...
Almost like a "Veblen good" type investment.
They basically have to price it at an unreasonable valuation so that people curse them while they take it. There's no way around it.
There's a good reason IPOs are shown to underperform the market
Yes, lots of downsides on this one, but people see it as a call option on a future where AI replaces all jobs, what would you pay for that? A rational response from someone that accepts the premise of the question is likely "anything"
Well, priced into the IPO price by Antrophic. It was you who said it would be priced into the IPO at launch, I just used the same terminology you did: "There's not going to be an IPO at a price where everyone agree that it'll see a 30% growth over 30 years. Obviously that'd be priced in."
If you don't think one should assume the market's expectations of future results are accurately priced into the IPO price, it's an argument in favour of the comment you tried to argue against, not contrary to it.
> Yes, lots of downsides on this one, but people see it as a call option on a future where AI replaces all jobs, what would you pay for that? A rational response from someone that accepts the premise of the question is likely "anything"
Even if you buy that premise, there are more premises needed. First (1) AI replaces all jobs, then (2) private AI models will be able to convert it into profit without being contested by open models, razor thin margins due to competition, regulation/nationalisation, or general societal upheaval, finally (3) Antrophic specifically will "win the race" and capture the lion's share of that market.
That being said, I would not bet any money on the stock losing value in any reasonable time frame either. It's enough to take a quick look at Tesla to see that fundamentals or actual results does not necessarily matter for a hyped sci-fi stock, even in the long term.
If that's what you think "priced in" means, I've a brand new company with a 1 trillion $ valuation priced in, would you like to buy some shares from me?
> It was you who said it would be priced into the IPO at launch
I actually said in my initial comment that the "priced in" argument is not even worth invoking, but here we are.
> If you don't think one should assume the market's expectations of future results are accurately priced into the IPO price, it's an argument in favour of the comment you tried to argue against, not contrary to it.
The comment I answered to initially said "Unless you have special insight, you should assume all stocks are equally good buys.", written by someone else. To which I replied "I smell your efficient market hypothesis argument, before you even begin just keep in mind that does not apply here, it's an IPO, the price is not set by the secondary market"
> (2) private AI models will be able to convert it into profit without being contested from open models, razor thin margins due to competition, regulation/nationalisation, or general societal upheaval, finally (3) Antrophic specifically will "win the race" and capture the lion's share of that market.
Very good arguments
So, a future where there is no market can only be a future where humans are extinct, in my opinion (some form of communism won't work)
If someone believes markets will still exist (one form or another) and there will still be exchanges of value between people, even in the most maximalist AI future - then I think it becomes rational for said person to seriously consider buying AI labs, even at stupid valuations
Admittedly I've formulated my previous comment wrong, I should've written "a future where AI has the potential to fulfill all jobs known today", instead of "a future where AI replaces all jobs"
As mentioned in other comments, I'm not trying to convince anyone to do anything, I'm here just to argue different points and positions
But in the past, rules & regulations basically forced companies to IPO at a certain size. This meant that when they IPO'd, there was still growth upside.
Those rules are gone now, so they can stay private and have all the growth happen privately. When they IPO now, it's more just an exit. The growth was captured by insiders only.
If it was really "just an exit", people wouldn't buy the IPO and it would flop
Of course people believe there is room for more growth, that's why they are buying it
Even in this thread you can see people (not me) arguing that the IPO is too cheap and it's easily worth 3 trillion $ like numbers mean nothing
Sometimes, there is no logic behind what people do, ultimately hoping to strike gold once while wasting money otherwise.
Also rare for an IPO, I assume.