Second, if I were tempted to invest in the company as a play on oil prices, the rising royalty rates, as oil prices go up, imply that my upside will be limited at Aramco. The elation at present is missing due to the many fears associated such as aftereffects of Japan Tsunami, quake, and nuclear disaster; increase in oil rates owing to Gaddafi chaos which though came to a settlement, negligible inflation control, and related factors. We would choose the chaos of bubbles, and the change that they create, over a world run by actuaries, where we would still be living in caves, weighing the probabilities of whether fire is a good invention or not. Any time you go on your lunch break you can make a good choice and turn on your body’s fat burners. This is a good time to start ” trendy boutique ing” up on those supplies. As readers of this blog know, I don’t write much about whether stocks collectively are over or under priced, other than my usual start of the year posts about markets or in response to market crisis.
In the twelve year stretch beginning in 2007, growth stocks have dramatically outperformed value stocks. The value of the company doesn’t change, but the share price might. This leads to a big market delusion, resulting in too many new companies being founded to take advantage of big markets, each company being overpriced by its cluster of founders and venture capitalists. This overconfidence then feeds into public markets, where investors get their cues on price and relevant metrics from private market investors, leading to inflated values in those markets. The risk, of course, is that the big market delusion fades and the market corrects as has happened in the case of both Uber and Lyft. Since the big market delusion leads to a collective over pricing, value investors can bet against a basket of stocks (sell short on an ETF like the ETFMG) and hope that the correction occurs soon enough to reap rewards. Value investors: The obvious advice is to avoid young, growth stocks whose value is based on big market stories. That outperformance was driven in part by stories regarding how technology companies were going to disrupt or invent big markets from housing to entertainment to automobiles.