it feels somewhat obvious, but isn’t it true that u can respect meta’s long term ability and still recognise the discount it was largely facing taking on due to Zuck’s metaverse craze? does it have to be diametrically opposed?
"On the whole, I’d guess doubling down on a stock that’s dropped by >50% over the past year is one of the most negative EV investments you can make." That's an interesting comment. I would be curious to hear how that thought process applies to a situation where you don't own the shares before the drop (random company XYZ where the stock is down >50% over the past year, i.e. a likely hunting ground for traditional value investors). Is the idea that the bias from having owned it previously impairs your ability to successfully spot the good bets among the list of things down 50%+?
"I do wonder if these dramatic stock drops are actually part of the value of being public. In 2022, every time Zuck took his estimates for losses on the Metaverse up, the stock market was giving him direct feedback that was an awful idea." The funny thing on Meta (based on my assessment of the reported results) is that there's been almost no efficiency push at FRL / metaverse; the vast majority of the "year of efficiency" has shown up at FOA (in a very meaningful way). Said differently, while I think your comment is likely true as a general statement, Zuck is still giving Mr. Market the stiff arm on FRL.
Thanks again Andrew!
- Alex
P.S. Your Meta post from October 2022 was impeccably timed!!!
This is the best post ever on averaging down. It should be chanted Gregorian style at every investment committee meeting:
http://brontecapital.blogspot.com/2017/01/when-do-you-average-down.html
Agree (and have linked to it many times before)
it feels somewhat obvious, but isn’t it true that u can respect meta’s long term ability and still recognise the discount it was largely facing taking on due to Zuck’s metaverse craze? does it have to be diametrically opposed?
Thought provoking post (as always) Andrew.
Two thoughts:
"On the whole, I’d guess doubling down on a stock that’s dropped by >50% over the past year is one of the most negative EV investments you can make." That's an interesting comment. I would be curious to hear how that thought process applies to a situation where you don't own the shares before the drop (random company XYZ where the stock is down >50% over the past year, i.e. a likely hunting ground for traditional value investors). Is the idea that the bias from having owned it previously impairs your ability to successfully spot the good bets among the list of things down 50%+?
"I do wonder if these dramatic stock drops are actually part of the value of being public. In 2022, every time Zuck took his estimates for losses on the Metaverse up, the stock market was giving him direct feedback that was an awful idea." The funny thing on Meta (based on my assessment of the reported results) is that there's been almost no efficiency push at FRL / metaverse; the vast majority of the "year of efficiency" has shown up at FOA (in a very meaningful way). Said differently, while I think your comment is likely true as a general statement, Zuck is still giving Mr. Market the stiff arm on FRL.
Thanks again Andrew!
- Alex
P.S. Your Meta post from October 2022 was impeccably timed!!!
Thanks!
I think what a stock you don't own is down 50%, it's often a great tiem to look. When a stock you do own is down 50%, it's generally a terribel time.
You hit the nail on the head on why: the bias of having owned it and watched it rip your face of makes you unable to be rational.
Understood, thanks for explaining Andrew!