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You gotta love how a roughly %3 decrease in year-to-year revenue leads to a %97 decrease in the stock price and an increase in the net loss from ~$30 million to

You gotta love how a roughly %3 decrease in year-to-year revenue leads to a %97 decrease in the stock price and an increase in the net loss from ~$30 million to ~$300 million Despite the concentration of highly intelligent and educated folks who make up the stock traders of the world... they make remarkably bad bets on the future of markets more often than not. I couldn't fathom the idea of me being any better playing the market vs pros -- but this really illustrates the fact that in the long run the only effective, proven way to consistently beat the market is investing in index funds. The stock market is a particularly fickle bitch and mostly zero-sum-game.

TheAlchemist 4y ago
This is only partially true. For day traders and short term gamblers - yes. But a lot of those highly intelligent folks are making a lot of money - I think there are roughly 2 big groups: - some kind of algorithmic trading (market making for sell side, arbitrage for prop trading) - mostly playing on market inefficiencies and technicalities - long term, value investors - Buffett etc. Most of the other guys are just chasing some impossible dreams. I really recommend to anybody interested in finance and investing to study Warren Buffett and Charlie Munger - their wisdom is simple yet amazing.
- kbenson 4y ago
  > long term, value investors - Buffett etc. Isn't Buffett's (Berkshire Hathaway's) strategy to actually take over companies where they see a way to cut expenses, change direction, synergize with other companies, etc and markets to make them more profitable? If so (and I admit to having mostly a vague understanding of the specifics of Berkshire Hathaway's strategy), and if that's indicative of that group, then it's interesting that those groups making money aren't really making "bets" as much as they're actively working to make their investments pay out.
  - TheAlchemist 4y ago
    Absolutely not ! Buffett buys business - usually family run, and … does absolutely nothing - he let them run as they did before. He only provides a financial power of Berkshire if needed and wanted. But thanks to his reputation and operational mode, the hood businesses select him when they sell. It’s a kind of virtuous circle by now.
senttoschool 4y ago
>consistently beat the market is investing in index funds. How can you beat the market by buying index funds? Did you mean consistently not underperforming the market by investing in index funds?
yccs27 4y ago
> You gotta love how a roughly %3 decrease in year-to-year revenue leads to a %97 decrease in the stock price and an increase in the net loss from ~$30 million to ~$300 million It's not that surprising. Revenue is worth nothing without a healthy margin, and that's where Carvana seems to have a problem. This quickly turns a company which could be profitable if it didn't invest as much into the future, into a company that is bleeding money and might be headed for bankruptcy. It explains a big part of the change in valuation.
- c4ptnjack 4y ago
  Not surprising, just indicative of how insane and wild the bull market got over the last decade. I can't help but think that a lot of businesses which could've ended up as profitable, sustainable market leaders over the long term have been, or will be, decimated by this misalignment of investment priorities. .
monetus 4y ago
Have any thoughts on Michael Burry saying there is an index fund bubble?
nicolashahn 4y ago
> Despite the concentration of highly intelligent and educated folks who make up the stock traders of the world... they make remarkably bad bets on the future of markets more often than not. Looking forward to seeing how well this ages wrt Carvana.

TheAlchemist 4y ago

This is only partially true. For day traders and short term gamblers - yes. But a lot of those highly intelligent folks are making a lot of money - I think there are roughly 2 big groups: - some kind of algorithmic trading (market making for sell side, arbitrage for prop trading) - mostly playing on market inefficiencies and technicalities - long term, value investors - Buffett etc. Most of the other guys are just chasing some impossible dreams. I really recommend to anybody interested in finance and investing to study Warren Buffett and Charlie Munger - their wisdom is simple yet amazing.

kbenson 4y ago
> long term, value investors - Buffett etc. Isn't Buffett's (Berkshire Hathaway's) strategy to actually take over companies where they see a way to cut expenses, change direction, synergize with other companies, etc and markets to make them more profitable? If so (and I admit to having mostly a vague understanding of the specifics of Berkshire Hathaway's strategy), and if that's indicative of that group, then it's interesting that those groups making money aren't really making "bets" as much as they're actively working to make their investments pay out.
- TheAlchemist 4y ago
  Absolutely not ! Buffett buys business - usually family run, and … does absolutely nothing - he let them run as they did before. He only provides a financial power of Berkshire if needed and wanted. But thanks to his reputation and operational mode, the hood businesses select him when they sell. It’s a kind of virtuous circle by now.

senttoschool 4y ago

>consistently beat the market is investing in index funds. How can you beat the market by buying index funds? Did you mean consistently not underperforming the market by investing in index funds?

yccs27 4y ago

> You gotta love how a roughly %3 decrease in year-to-year revenue leads to a %97 decrease in the stock price and an increase in the net loss from ~$30 million to ~$300 million It's not that surprising. Revenue is worth nothing without a healthy margin, and that's where Carvana seems to have a problem. This quickly turns a company which could be profitable if it didn't invest as much into the future, into a company that is bleeding money and might be headed for bankruptcy. It explains a big part of the change in valuation.

c4ptnjack 4y ago
Not surprising, just indicative of how insane and wild the bull market got over the last decade. I can't help but think that a lot of businesses which could've ended up as profitable, sustainable market leaders over the long term have been, or will be, decimated by this misalignment of investment priorities. .

monetus 4y ago

Have any thoughts on Michael Burry saying there is an index fund bubble?

nicolashahn 4y ago

> Despite the concentration of highly intelligent and educated folks who make up the stock traders of the world... they make remarkably bad bets on the future of markets more often than not. Looking forward to seeing how well this ages wrt Carvana.