Comment by extraextra
18 hours ago
"Unless you have special insight, you should assume all stocks are equally good buys."
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
> "Unless you have special insight, you should assume all stocks are equally good buys."
> 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.
You're doing amazing then, good for you!
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...
It's simpler: If this stock was such a great deal that everyone would buy the it over anything else, then clearly Anthropic had set the price too low.
I would actually argue that if they price the IPO too low, people would assume they are not confident in their company and the whole AI sector would sink.
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.