Greenberg: Moral of The 3-D Printing Story
As Travis Cocke of the Voss Value Fund writes in a letter to his shareholders: "This mistake in shorting Tesla and a few other momentum-driven names has not been in misdiagnosing them as a tremendous bubble, but in inaccurately anticipating the magnitude and especially duration of irrationality inflating them. The problem for a prudent investor or bears is that events in the distant future are as hard to disprove as they are to prove, so logical arguments dissuade very few believers from buying at extreme levels." "Everyone wants to talk about their recent successful speculative episodes. People inevitably get giddy to tell you about how they bought Solar City calls before a pop or day-traded a triple-leveraged ETF." "I vaguely remember a striking quote from the showman David Blaine that I'll paraphrase. Although I cannot quite remember the context, that is not what's most important: 'As a kid I liked to hold my most prized possession out the window of my parent's car as we sped down the highway, seeing just how lightly I could hold onto it without losing it forever." "Like Mr. Blaine, some participants in the market are aware that they are tap-dancing on thin ice and perhaps actually enjoy the thrill and sense of danger of losing their personal savings or previous investment gains (easy come, easy go), while others are altogether oblivious to the risks they are taking and to quote GG who likes to quote GG (George Giannukos/Gordon Gekko) they 'don't know the difference between livestock and preferred stock'." "These noise traders are vehemently defending or promoting stocks with impassioned garble that 90% of the time neglects what is most central to any investment decision: valuation. More and more we hear the meme that valuation doesn't matter..."
And it doesn't, until it does. Just ask investors in Voxeljet.
--Written by Herb Greenberg. Follow @herbgreenberg