CEOs
Who is the CEO of Apple
Tim Cook
Who is Cathie Wood?
CEO and CIO of Ark Invest
- compares this "AI revolution" to internet in early to mid 90s
- says short-term focus is on robotaxis but long term will be healthcare
- Under appreciated application of AI is healthcare - data is the name of the game and cells can be sequenced to look for cures
-some people think Cathy is too optimistic and not cautious enough
When and Where Was the Tulip Bubble?
Holland in the 1600s
Minsky Model of Financial Speculation
Five stages in the credit cycle:
Displacement
Boom
Euphoria, then profit-taking
Revulsion
Panic / crisis
Charles Mackay on Tulipmania
exemplified the gullibility of crowds and the dangers of financial speculation.
Who is the CEO of Amazon
Andy Jazzy
Who is Mary Meeker?
MD and Research Analyst at Morgan Stanley
- Heavily bullish on tech stocks. predicted how much internet stocks would go up
- Lawsuit when dot com bubble burst, both her and her company
- Accused of aggressively promoting stocks of Morgan Stanley clients
- Complaint alleges that she made biased recommendations for Amazon to increase her profit-based salary, estimated at $15 million (never proven)
Definition of a bubble?
"Any unsound commercial undertaking accompanied by a high degree of speculation." The price of an object [its "market value"] has become divorced from its
"intrinsic value".
Minsky's "Financial Instability Hypothesis"
the financial system was unstable / fragile, and prone to crisis.
permabull
an investor who consistently acts in the expectation that the value of stocks and shares will rise
Who is the CEO of Nvidia?
Jensen Huang
Who is Henry Blodget?
Merril Lynch Analyst
Put "ridiculous" $400 target price on Amazon in Dec 1998 → eventually became true in 2013
Publicly touted some stocks as "strong buys" that he
privately disparaged in internal emails. Eventually disbarred from the securities industry.
Incredible fall from grace.
Firm Foundation Theory
If the current price is lower than the intrinsic value, you should buy it
If the current price is higher than the intrinsic value, you should sell it
Analyst Liability Post Dot.Com Crash
Thomson v. Morgan Stanley/Meeker
Plaintiff: Thomson, 2001
Defendants: Morgan Stanley Dean Witter & Co. and Mary
Meeker
Complaint: Analysts had a conflict of interest and analysts
should be held accountable for investor losses from bad
calls on Internet stocks
Case dismissed
- but now caveats/disclaimers on end of investment reports
Who is the CEO of Microsoft
Satya Nadella
Who is Abby Cohen?
GS Analyst, Recognized the power of the internet stocks early on, disagreed with Greenspan and said the exuberance was rational, Cohen later accused of being a "perma-bull" but for a while, boom continued. But she actually had a rather cautious and data-driven approach to market analysis. Famously predicted the 1990s bull market
Dot Com Survivors
Yahoo
Ebay
Amazon
Apple
Dell
Castle in the air theory by keynes?
Suggests that professional investors should focus on predicting how other investors might act. During times of optimism, investors often build high expectations or “castles in the air” around certain stocks. The successful investor tries to beat the gun by estimating what investment situations are most susceptible to public castle-building and then buying before the crowd.
"Chinese Wall"
Invisible wall should exist between analysts and the investment banking division to separate those giving corporate advice on takeovers from those recommending stocks
Who is the CEO of Alphabet?
Sundar Pichai
Who is Jeremy Grantham?
Chief Investment Strategist at GMO
- Says we are currently in an Al "bubble"
- considered an investing legend
- Predicted the dot.com collapse
- Has predicted for a few years now an AI bubble collapse akin to 1929.
What in 1997 also propelled the boom
Cut capital gains taxes: Reduced the top capital gains rate from 28% to 20%.
Lowered the 15% bracket to 10%.
Keynes' beauty analogy
Represents castle-in-the-air theory: an investment is worth a certain price to a buyer because he/she expects to sell it to someone else at a higher price
Keynes likened professional investors' speculation on stock markets to a 'beauty contest. He argued that professionals trade stock, not based on their own long-term forecast of companies' assets but on the anticipation of market valuation after a few months.
The 2008 financial crisis was called a
Minsky Moment
Minsky noted a trend among financial speculators to assume riskier and riskier behavior. He predicted that when their "formerly isolated" world burst, it would affect the "real" economy of producers and consumers.