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Buying Tech Stocks? Hello Poverty

Buying Tech Stocks? Hello Poverty

IPO's typically mark the hype top - this time won't be different - plus Messiahs & FTSE opportunity

Tim Vollans
September 15, 2023 • Estimated Reading Time: 7 minutes

The tech mania’s FINALLY ending. It couldn’t be more over.

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It’s been an amazing run. But all good things come to an end.

Yesterday’s Arm IPO ticks all the boxes:

CNBC: Arm climbs 25% in Nasdaq debut after pricing IPO at $51 a share

The chip design company is valued at a steep premium relative to the rest of the semiconductor market.
SoftBank still holds about 90% of Arm’s stock.

Softbank stocks don’t have the best track record…

Yeah. That’s a terrible strike rate. And it comes just as the AI hype is peaking…

Even then, Softbank’s chief is doing his best to link Arm to the AI bandwagon, even though it’s a VERY tough sell.

Here’s an interview with Arm CEO Haas, Son & David Faber at CNBC.

The host asked the most pressing question…

But you know, when investors looked at your S-1 for example and or your recent numbers, they didn’t see a great deal of growth year-over-year.
And yet you’re pointing to a much more significant growth next year over this year and even after that. Why?

The replies sum to

Honestly, the entire interview is pure vibes & vapour. All about the applications that Arm could have, AI this, AI that, but there’s no evidence of anything immediate…

Without doubt, the best part is Masa Son saying he’s only selling some of these very precious shares out of the goodness of his heart.

❝

I wanted to keep 100% of Arm - the reason we are having IPO and selling is because Arm is such an important company for the industry, I wanted investors to have opportunity to participate on the upside opportunity of Arm

Masa Son

He’s doing it FOR YOU, guys. It’s basically philanthropy.

How could you turn down such a generous offer?

Comprehensive proof that the AI hype has peaked and the narrative cycle has moved on…

Alien sightings: Supposed extraterrestrials presented to Mexican congress

One man stole the limelight though, bringing with him what he says are two bodies that prove we are not alone

https://www.france24.com/en/video/20230914-alien-sightings-supposed-extraterrestrials-presented-to-mexican-congress

I’m only half-joking. Attention is elsewhere.

AI might be a game-changer in coming years, but the hype cycle (that typically drives the extra ‘premium’ on valuations) is running on fumes.

Plus…

Big IPO’s typically mark the end of a trend

It’s not an exact science, more a sign that the trend is well and truly mature and there’s no juice left in it.

This was a tongue in cheek tweet back in 2021

The coinbase IPO in April 2021 didn’t mark the exact top in Bitcoin. There were still a few more months left. By November 2021, the entire crypto market cap hit $3 trillion.

Then it went rapidly downhill.

The Robinhood IPO actually came a little after the peak for memestonks, in July 2021:

GME Peak - January 2021
AMC Peak - June 2021
BBBY Peaks - January & June 2021

In 2007, the Blackstone IPO was the top for “the booming private equity industry”
In 2011, the Glencore IPO coincided with a peak in commodity pricing…

Peak hype = Peak valuations. That’s all there is to it.

The Messiah Complex & Revolutions

While we’re on the behavioural train, this really made me stop and think:

It’s sooooo true. And that culture was exported.

Everywhere you look are individuals, companies, governments & organisations looking to Change The World™ in one way or another.

Now, there’s nothing wrong with change as long as it’s purposeful.

It also helps if you’re actually knowledgeable in your field.

But is that what we’re seeing?

Or is it more the case that we’re witnessing people becoming the stars of their very own hero’s journey?

Basically doing an Iron Man:

Tony Stark is an incredibly flawed human creature chasing heroism

He is the aphorism “the road to hell is paved with good intentions” come to life. Violence and oppression are bad, so he’ll just drop into foreign soil, blow some shit up, and dust his hands of the whole dirty business.

He then has the condescending balls to act on the world’s behalf because he sees his superior intellect as his own get-out-of-jail-free card.
He simply knows what’s best for you.

The best Hero Villain there’s ever been.

Back to the thread. Deep, thought-provoking & worth a read. The final tweet hits hardest:

We’re tearing at every societal consensus with both hands, influencing our way into being the change we want to see in the world.

We are a messiah society.

We are a society of convex outcomes.

A plague of revolutionaries.

@coloradotravis

I reached out to Gandhi for his comments on the matter: