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It is often said that once you have a hammer, everything looks like a nail. So be it with the big market delusion. Since Aswath Damodaran and I published our article “The Big Market Delusion,” evidence of the delusion has been popping up everywhere – at least in my opinion. The latest instance is the market for electric trucks. In fact, this may be one of the best examples yet.
(more…)In an article published in the Financial Analyst Journal, Aswath Damodaran and I describe and analyze what we call “The Big Market Delusion.”
As we describe in that article, the peril of a big market, especially in its early stages, is that the entrepreneurs it attracts and the investors who provide funding are often so enthused about their prospects for dramatic growth, that they ignore fundamentals and price their companies with unrealistic expectations about the future. Furthermore, we note that when the big market delusion is in force, entrepreneurs, managers, and investors generally downplay existing competition, thus failing to factor in the reality that growth will have to be shared with both existing and potential new entrants. We also observed that the big market space tends to quickly become overcrowded, as too many companies get founded, with each thinking the odds of success are better than they actually are.
(more…)Editor’s note: This article is part of a series ValueWalk is doing on tail risk hedge funds. The series is based on several weeks of research and discussions with over a dozen experts in the field. All the content will be first available to our premium subscribers and some will be released at a later date for all readers. If you want to see the full series and support us please click here.
Many tail-risk hedge funds posted astonishing gains during the March selloff, with at least one fund reporting a gain of over 3,000%. However, it’s important for investors to read between the lines when it comes to choosing which hedge funds to invest in.
Whenever looking at the returns of any fund, especially tail-risk funds, it’s important to make sure you’re doing an apples-to-apples comparison by using the same measurement of returns across all the funds you’re comparing.
(more…)ValueWalk held its second Contrarian Investors Virtual Conference, and Grizzly Research Founder Siegfried Eggert is pitching Hebron Technology Co Ltd (NASDAQ:HEBT) as a short. He believes Hebron is an “insider enrichment scheme without economic basis.”
In his presentation, Eggert noted that Hebron Technology’s stock has skyrocketed following recent private placements and acquisitions. He believes the company is running an insider enrichment scheme. He also said all of last year’s major transactions were “announced and portrayed as arms-length,” but the Grizzly Research team was able to link all of them back to company insiders.
(more…)BlackRock’s coziness with China isn’t going unnoticed amid its increased push in favor of (environmental, social, and corporate governance (ESG) issues. China isn’t exactly known for supporting ESG issues, and BlackRock is being criticized as favoring Chinese companies that lack regulatory oversight over their better regulated U.S. peers. Meanwhile, U.S. lawmakers are criticizing the firm’s involvement in coronavirus-relief measures for its focus on China.
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