A Tour Through History's Most Entertaining Price Anomalies (msn.com) 29
MicroStrategy's bitcoin holdings and a tech investment fund are commanding extraordinary premiums in U.S. markets, highlighting unusual price anomalies reminiscent of past market distortions. MicroStrategy shares are trading at more than double the market value of their main asset -- bitcoin holdings -- while closed-end fund Destiny Tech100 recently traded at 11 times its net asset value, down from 21 times earlier in 2024.
Similar market irregularities have emerged throughout history. In 1923, investor Benjamin Graham profited from a disconnect between DuPont and General Motors shares. During the 1929 bull market, closed-end fund Capital Administration Co. traded at a 1,235% premium to its net asset value. WSJ adds: The PalmPilot during the 1990s and early 2000s was a hand-held device and personal assistant that came with a touch-screen display and a stylus. Palm was the biggest maker of hand-held computer devices, with 70% market share, and it held its initial public offering in March 2000, about a week before the Nasdaq Composite Index's peak during the dot-com bubble.
Palm's shares jumped 150% on their first day of trading, giving Palm a stock-market value of about $53 billion. Palm was still 94%-owned by parent 3Com at the time. Yet on Palm's first day of trading, 3Com's shares fell 21%.
The funny part: According to the stock market, 3Com was worth about $23 billion less than the value of the Palm shares that 3Com owned. This made no sense, yet the valuations remained out of whack for months. In time, both stocks came down to earth, sanity prevailed and the world eventually moved on to smartphones.
Similar market irregularities have emerged throughout history. In 1923, investor Benjamin Graham profited from a disconnect between DuPont and General Motors shares. During the 1929 bull market, closed-end fund Capital Administration Co. traded at a 1,235% premium to its net asset value. WSJ adds: The PalmPilot during the 1990s and early 2000s was a hand-held device and personal assistant that came with a touch-screen display and a stylus. Palm was the biggest maker of hand-held computer devices, with 70% market share, and it held its initial public offering in March 2000, about a week before the Nasdaq Composite Index's peak during the dot-com bubble.
Palm's shares jumped 150% on their first day of trading, giving Palm a stock-market value of about $53 billion. Palm was still 94%-owned by parent 3Com at the time. Yet on Palm's first day of trading, 3Com's shares fell 21%.
The funny part: According to the stock market, 3Com was worth about $23 billion less than the value of the Palm shares that 3Com owned. This made no sense, yet the valuations remained out of whack for months. In time, both stocks came down to earth, sanity prevailed and the world eventually moved on to smartphones.
Where's Nvidia? (Score:2)
Because if there ever was a stupid valuation that will ruin a whole lot of investors when the current AI bubble bursts, it's Nvidia's.
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This isn't an article about people making actual products of actual customers, where one can debate the value of their offerings. It's about companies who are *mathematically stupid* buys. Whose stock is worth much more than what it's directly, measurably based off of.
The annoying thing is that neither of these have options available, so you can't control risk while shorting them. And you're up against meme stocks.
Re:Where's Nvidia? (Score:5, Informative)
Here's an analysis of 3com / Palm situation and why it wasn't so irrational as this simple analysis claims. (I found it looking to find if 3com had a bunch of debt at the time, but that's not the answer.)
http://www.econ.yale.edu/~shil... [yale.edu]
But I don't have the expertise or time to digest it.
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I don't think the Palm situation was all that crazy. I did not see the need or purpose for a PDA at the time, but I know a lot of people who were fucking bonkers about them.
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Because if there ever was a stupid valuation that will ruin a whole lot of investors when the current AI bubble bursts, it's Nvidia's.
There are reasonable multiples that might indicate that Nvidia is overvalued. However, price to NAV is not one of them. No one uses price to NAV for tech companies because the key assets are not tangible or easily appraised.
The AI bubble might burst. It hasn't for the last 10 years, but it might burst any moment now, or it may not. Aside from the AGI hype, there is a lot of AI activity that has already led to profits and that is already leading to revenue generation. However, most of that is non-consum
TSLA Bubble now (Score:3)
TSLA stock now is at a 108 P/E ratio. Far above the average SP500 P/E.
This is driven by a lot of hype from Tesla stock pumpers in spite of the fact that it's core business of EV cars is declining in spite of rising EV sales worldwide.
The pumpers are promoting AI, robots, etc. which will take years to show a profit (if at all).
It will be interesting to see when this falls back to earth.
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It's a bet on corruption, plain and simple.
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The other problem is that most idiots are playing with someone else's money.
Oh sorry did I say idiots? I mean 'Investors' (those are air quote gestures).
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The stock more than doubled shortly after Trump won the election. A good time to get out.
You'd think somebody with access to Trump would be simultaneously shorting TSLA and continuously telling Trump that people think Musk is calling the shots. Sooner or later Trump will send Musk packing and TSLA will plummet. Unless of course Trump has no choice for some reason...
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TSLA stock now is at a 108 P/E ratio. Far above the average SP500 P/E.
This is driven by a lot of hype from Tesla stock pumpers in spite of the fact that it's core business of EV cars is declining in spite of rising EV sales worldwide.
The pumpers are promoting AI, robots, etc. which will take years to show a profit (if at all).
It will be interesting to see when this falls back to earth.
Recent TSLA appreciation is riding the coattails of the Trump election success. Elon is hyping autonomous vehicles, but he's been doing that for many years. Level 3 autonomy will slowly appear in the market over the next 5-10 years. Level 4/5 is much farther than that and is not a justification for current TSLA prices.
Tesla's core business is not growing because the total addressable market is growing slowly and competition (i.e., Chinese companies) is stealing market share. Tesla fundamentals are not p
Millions of use cases crying out in bewilderment (Score:2)
Re:Millions of use cases crying out in bewildermen (Score:4, Insightful)
Please re-read. This isn't about whether the PalmPilot was good or not. This was about the simple fact that you could have gotten a much better buy on Palm shares by buying 3com, yet for months the disparity persisted.
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"You could take notes on it in a theatre without upsetting anybody. "
Except maybe the patient.
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HP destroyed Palm (Score:1)
Palm made the first great smartphones.
HP bought them.
And destroyed them.
Re:HP destroyed Palm (Score:4, Informative)
Lest we forget:
Palm made the first great smartphones.
HP bought them.
And destroyed them.
As much as I enjoy spending time on the Carly hate-wagon, there's a few contextual things in the mix here...
Blackberry was really the king of smartphones before Apple took the crown. There was a decent race between Blackberry, Palm, and Windows Mobile, but Palm had a bit of trouble finding a niche. Windows Mobile integrated well with Active Directory and Exchange, making it a turnkey solution for Microsoft shops in the 2000s. Blackberry had BES and BBM. BES pioneered MDM long before Jamf and Hexnode, while BBM was as popular with executives as it was with teens, a decade before Whatsapp would replace it.
Palm had...its desktop syncing app. It was great for its time, but there wasn't much of an ecosystem around it. Hotsync was great, and its Outlook integration was nice, but even their attempt at media playback with the Lifedrive wreaked of compromise. Palm had that perfect blend of simplicity and customizability that even Apple took some time to get right, but even while WinMo had decent support for a shareware distribution model for applications and the clunky-but-functional Windows Media Player, Palm still primarily sold software on SD cards.
The Palm Pre was unique and interesting...but it once again, wreaked of compromise. No Hotsync for the Palm Desktop holdouts, carrier exclusivity in the US was Sprint, WebOS wasn't courting app developers the way Apple and Android were, most reviews of the phone complained about its very plastic-y feel and the keyboard's propensity to break, there was no media solution to compete with iTunes, and no MDM for sysadmins.
To your point though, HP's acquisition certainly didn't help in any way. They promised "WebOS everywhere", but the HP Touchpad notoriously spent less than two months on the market, and the demonstrated port to laptops to replace the terrible QuickPlay solution was never released, so it was clear that even HP had no faith in the products.
HP's purchase was the nail in the coffin, for sure, but Palm had plenty more going against it in the mid-2000s that would have required another Steve Jobs to breathe life into the brand if HP really wanted to leverage their products for the mobile device market.
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There was a decent race between Blackberry, Palm, and Windows Mobile
Outside of the USA, Nokia was winning the race.
The Madness of Crowds (Score:4, Informative)
There's a copy of Charles Mackay's book Extraordinary Popular Delusions and the Madness of Crowds [wikipedia.org] over at the Internet Archive [archive.org]. Have a read about the South Sea Company bubble [wikipedia.org] of 1711 to 1720, Tulip Mania [wikipedia.org] and many more.
The London Whale (Score:2)
Stupid summary (Score:2)
I remember 3com in the day; it was disconnected from the company it owned 94% of because it was dying. Companies are valued on projections for future earnings which covers most of the disconnect.
Selling Prices (Score:3)
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The old saying holds true (Score:2)
"The market can stay irrational longer than you can stay solvent."