Few comments have made me want to downvote as much as this one. I still have another hundred or so points to go until I am allowed so I'll have to settle for explaining to you how much I disagree.
Your argument is a logical fallacy that I see a lot, but doesn't have a fancy Latin name. It is a combination of appeal to authority and circular reasoning so I'll give it a name right now: the Authority Circle. It has the form of:
"I believe X person/company/country is doing something dumb/bad/foolish."
"If it wasn't a good idea, they wouldn't be doing it."
This assumes that person X is smarter than you, therefore the fact that they are choosing to take an action is evidence that it is good. This is a lazy and unconstructive argument and you should be ashamed of yourself. (Unless you are a Wall Street shill doing PR spin. In that case, well done.)
So logically your argument is not well formed; what about factually? The behavior we see in investors is incredibly focused on short term gains and why not? There is no benefit to long term success to a public investor. Once the company (a small percentage of) their money is invested in flames out, they can simply invest in another company and drain them dry until it is time to bleed another one. (Hopefully unloading their stock to chumps along the way at the right time, before anyone realizes they are being sold a sick cow.) We know from history that unless government regulates the stock market, it is a short matter of time until the house of cards collapses. Today, the most long-lived publicly-held corporations are the ones where the CEO has the power to say "no" to intense investor demand for short-term gain. (We are waiting to see how long Apple can survive this now that Jobs is gone.) Everything we know tells us "yes, investors are indeed that stupid."
You have offered no new or useful facts or reasoning to this discussion. I give your comment a 0/10 for your unhelpful waste of everyone's time.
My post is not the conventional wisdom, hence I expect the downvotes. But hear me out.
I said investors, not an individual. There are a lot of professional investors who full time investigate a company, in fact Wall Street is full of them. Do I really believe that you (or I) am better informed about a company's future prospects? Why do you believe you are smarter than they are?
Consider (again) Amazon. Why does it have such a high P/E? That is hardly evidence of short term thinking. Why did Microsoft, for the last 10 years, have increasing profits and a shrinking P/E? I submit that investors were pricing the stock based on their estimation of the long term value of the stock.
A CEO once told me he was organizing his company around short term results, because "that's what Wall Street wants". The stock cratered shortly afterwards. He fooled nobody but himself.
Let's put it this way. Give us a list of stocks you believe are overvalued because foolish investors have bid the price up because of long term sacrifice for short term results. Eventually, the chickens must come to roost and the stock must collapse. So I must ask, have you shorted those stocks? Are you willing to bet your own money on being smarter than Wall Street?
You open by claiming that you are being downvoted because you are such a free-thinking maverick that you lost the popularity contest with the stodgy conservatives at HN instead being due to any shortcomings in your argument. That's adorable.
Your second paragraph sticks with the same nonsense as your previous post i.e. investors are smarter than us so they have to be right.
Now you try some new stuff so thanks for that. You made a good example of Amazon but since I already claimed that strong CEOs can resist short-term investor pressures and Bezos clearly falls into this category I invalidated this argument before you even wrote it down. It makes me think you aren't really paying attention.
I am not sure what point you are trying to make with the next paragraph but whatever it is there is not enough information there to draw any sort of conclusion. Stocks tank for many reasons including bad luck so one tale of a data point isn't useful.
Your last paragraph is well done. Unlike your other points it took a little thought to deduce why it is incorrect. I do believe there are many overvalued stocks but I am not going to short them. Bubbles can live a very, very long time and shorting them is a bet on when the bubble will pop, not on how big the bubble is, and I claim no special insight or information on the exact time any particular ponzi pyramid will inevitably implode.
Much improved: 2/10 (earned in the last paragraph only.)
> CEOs can resist short-term investor pressures and Bezos clearly falls into this category
Amazon's P/E is currently 503. The P/E for the S&P 500 is around 19. The "investor pressures" are strongly supporting Bezos.
I'm one of them. I'm long on AMZN, with my own money on the line, and it's done well for me. I plan on staying pat.
Whether I'm right or wrong about AMZN's future is irrelevant - what is relevant is that a high P/E is a sure sign of investors betting on the long term future of a company, and not being obsessed with the next quarter. The CEO doesn't set the P/E, the investors do.
Your argument is a logical fallacy that I see a lot, but doesn't have a fancy Latin name. It is a combination of appeal to authority and circular reasoning so I'll give it a name right now: the Authority Circle. It has the form of:
"I believe X person/company/country is doing something dumb/bad/foolish."
"If it wasn't a good idea, they wouldn't be doing it."
This assumes that person X is smarter than you, therefore the fact that they are choosing to take an action is evidence that it is good. This is a lazy and unconstructive argument and you should be ashamed of yourself. (Unless you are a Wall Street shill doing PR spin. In that case, well done.)
So logically your argument is not well formed; what about factually? The behavior we see in investors is incredibly focused on short term gains and why not? There is no benefit to long term success to a public investor. Once the company (a small percentage of) their money is invested in flames out, they can simply invest in another company and drain them dry until it is time to bleed another one. (Hopefully unloading their stock to chumps along the way at the right time, before anyone realizes they are being sold a sick cow.) We know from history that unless government regulates the stock market, it is a short matter of time until the house of cards collapses. Today, the most long-lived publicly-held corporations are the ones where the CEO has the power to say "no" to intense investor demand for short-term gain. (We are waiting to see how long Apple can survive this now that Jobs is gone.) Everything we know tells us "yes, investors are indeed that stupid."
You have offered no new or useful facts or reasoning to this discussion. I give your comment a 0/10 for your unhelpful waste of everyone's time.