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points by thomasahle 3 days ago | 0 comments

Why would you expect this to be a magical making money stock?

Unless you have special insight, you should assume all stocks are equally good buys.

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.

[–] extraextra 3 days 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

[–] chasd00 3 days ago

> "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.

[–] extraextra 3 days ago

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...

[–] thomasahle 3 days ago

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.

[–] extraextra 3 days ago

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.

[–] i_cannot_hack 3 days ago

I think the argument is that the valuation is so high because the enormous growth IS priced in, but still being far from guaranteed. Meaning there's only downside: if the enormous growth is realized it would be a wash for your investment since it is already priced in, and in the plausible scenario it fails spectacularly or only grows moderately your investment will lose a lot of value.

[–] extraextra 3 days ago

It's an IPO, nothing is "priced in" until is actually being transacted in the secondary market

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"

[–] i_cannot_hack 3 days ago

> It's an IPO, nothing is "priced in" until is actually being transacted in the secondary market

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.

[–] extraextra 3 days ago

> priced into the IPO price by Antrophic

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

[–] i_cannot_hack 3 days ago

Sorry, I confused you with the user thomasahle that I initially responded to, which explains the confusion here. I don't think we disagree with each other.

[–] extraextra 3 days ago

Indeed, we're in violent agreement hahaha

[–] necovek 3 days ago

Or nothing since there is no market or spending with no jobs for people?

[–] extraextra 3 days ago

It is my belief that while humans exist, there will be markets, one way or another. There will always be exchanges of value between people. There will always be people at different levels, and a form o currency to qualify for the higher levels. Even in communist societies this was true

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

[–] necovek 2 days ago

Production of surplus value is what generally qualifies as a "job" — I certainly agree there is potential for tools to replace/augment any job we think of, but we'll simultaneously continue inventing new jobs.

Just like economies are mostly a service-industry today, a concept that barely made any sense 100 years ago.

Still, buying tooling companies' shares makes sense when that company has something which is hard for anyone else to replicate: but we are seeing that it really is not with a number of proprietary and open weights competitors who generally go head-to-head with minor differences in capability.

This only to say that believing valuations are unreasonable does not mean you can't even be an "AI maximallist" — but markets do not work in a simple cost/value-provided equation for a long time now.

[–] whateveracct 3 days ago

In today's world, yes.

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.

[–] extraextra 3 days ago

There weren't any size caps on IPOs and no regulation can tell a company what multiples to IPO at, that's just false information

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

[–] scott_weber 3 days ago

Possibly parent is thinking of https://en.wikipedia.org/wiki/Jumpstart_Our_Business_Startup... which did change some conditions, though not in terms of "multiples".

[–] necovek 3 days ago

People participate in betting and chance games even if the odds are against them.

Sometimes, there is no logic behind what people do, ultimately hoping to strike gold once while wasting money otherwise.

[–] extraextra 3 days ago

If that's your interpretation of things, that there is no logic behind some of the smartest people in the world throwing tens of billions at Anthropic with no logic behind it, I have no further comments

[–] necovek 2 days ago

A general statement I made is mostly to refute that people invest exclusively when the data is clearly supporting that investment with guaranteed returns: basically, the fact that people will buy does not mean that they have guaranteed returns.

Some might be looking to capitalize early and exit quickly; some are creating demand because they have other drivers in their portfolio (eg. Nvidia or Micron); some might really believe in the company; and some might be gambling with their disposable investment money for their high-risk/high-gain part of portfolio.

[–] extraextra 1 day ago

Well, you're not refuting anything because no one claimed "that people invest exclusively when the data is clearly supporting that investment with guaranteed returns."

What you're attempting to do is called the straw man fallacy and it's a cheap shot.

[–] whateveracct 3 days ago

they were not forced but they were forced to report like a public company even if they didn't IPO. all the cost with none of the benefit was an incentive to IPO earlier.

[–] extraextra 3 days ago

[–] whateveracct 2 days ago

yes tho. once you hit a certain number of shareholders (which anthropic clearly is past), you used to have to report with the regularity and rigor of a public company. so if you do, why not IPO and get some cash?

that and other changes that enabled private investment at this scale. it's all about privatize the pump socialize the dump via IPO

[–] extraextra 1 day ago

You're just typing gibberish

The rule is still in place, if a company has more than 2000 shareholders, of which minimum 500 are non-accredited (employee stock based compensation does NOT count), the company has to do ongoing financial reporting

You're misinformed

[–] whateveracct 1 day ago

right but before, employees' shares counted. that's one of the changes i'm talking about.

[–] pegasus 3 days ago

But those other ones at least have the room to potentially do that, even if most won't. So what GP is saying is that this is a magical stock indeed, but the other way around, in that it's magically capped.

[–] vouwfietsman 3 days ago

The point OP is making is that it is not, in fact that its the opposite: its a magical valuation that almost guarantees you lose money.

Also rare for an IPO, I assume.