Have any of you seen these videos?

I'd never heard him speak until today, and my, what a disconnect between my impression of him based on the media portrayal and how he comes across in these videos.

Curious to get your collective takes, on both the person and the presentation.

No one is argue that he is smart boy, but you should divide intelligence from the ethical part of a person.

I passively watched the first two videos. They were actually pretty entertaining considering how dry the material is and he did a good job of emphasizing the important stuff.

The $1/year perpetual bond was a fun question, but the fact that he priced his own default risk below treasuries is pretty LOL.

I like the emphasis on enterprise value. I've also noticed that a lot of people struggle with the idea (I don't understand why), and it baffles me that people are willing to invest large amounts in individual stocks without any concern for the most basic capital structure concepts. I'd definitely recommend the first couple videos to anyone who's confused by the term "enterprise value".

I'll prob get through the rest of them at some point. Are any of them particularly good?

He's a POS, but he's also a good teacher and a smart guy.

Do you guys think this position is reasonable by Shkreli? From 1h27m40s to 1h30m30s.
https://www.youtube.com/watch?v=F9D2704NolU#t=1h27m40s

Same thing mentioned here from 1h52m04s to 1h53m05s.
https://www.youtube.com/watch?v=TRXqVOrdsz0#t=1h52m04s

TL;DR Shkreli is anti-indexing. Market returns from 1926 to today serve no indication of future market performance because A) 90 years is a small sample size, and B) other unnamed (at least through lesson 6) systematic factors are working against markets continuing to uptrend.

he's 100% wrong. he has a fundamental misunderstanding. i thought he was smarter than that. companies make money. the economy could shrink 2% every year and stocks would still either go up or pay dividends for positive returns overall. we're currently around a p/e of 20, or 5% earnings yield which is admittedly historically a little high, but are companies just going to stop making money?

it's fine to argue that indexing may not have the same returns in the future, but something catastrophic would have to happen for stocks not to have positive real returns in the next 30 years.

his explanation of beta and alpha is completely wrong too.

the fact is that

a) as he said, indexing throw out the losers

b) companies goes side by side w inflation

c) companies main target is to make ****ing money, so they have to invest, to buyback, to deliver dividends, etc, to boost their profit, to continue to live on. they make investment to be worth more over the years.

the real question one should be asking:

if everyone is everyone is going long index, then at some point the potential profit for everyone will decrease, because there's less money to be made (you should think about it in a game theory way), i think a lot of people are underestimating this. SO, buying at whatever the price of the index is, just because eventually it will go up, and eventually it will return you 6% per annum, compounded, just because it did it in the past, is complete bull****. this is how bubbles are created, this is how the market won't ever go down deeply, until it's really the end of the world, but it will make big dip (5-10% sharp move in few days/weeks), because all those players want to exit as soon as possible and then re-enter as-soon as possible, while they are eroding their account, while they are increasing volatilty, max drawdown etc.

so, indexing, may have been the smartest strategy in the past, but now, perhaps it's not, because a) we are not in a low vol trending higher market, b) everyone knows that -> no edge/diminished return for everyone.

what to do? be contrarian, buy the dip, sell the rip. and a lot of people are willing to catch the falling knife, but then, nobody is selling things when they are overbought.


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b) the part of the "beta" is wrong, i haven't had the time to follow everything he said, but i think he is smart.
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here's his wiki:

https://en.wikipedia.org/wiki/Martin_Shkreli

personally i'm not a fan, nor i do care about him, i'm not from the US and here in my country the healthcare is free, so really i don't feel any hate for him, personally i'm long gilead, so really, i think that he did the smartest thing. he didn't break the law for rising prices, he break the law in other way when he touched money of people he shouldn't have touched.

the fact that he is a douche doesn't mean he is a ******. i think he is smarter than the average winning trader/hedge fund manager, so he is waaay smarter than the average person. of course, as w the explaination on the "beta" he is not always correct, but that's fine.

really interesting the fact that he is doing this "podcast/streaming" w other users, i don't think any other people are doing something similar for finance, or at least, they don't have the potentiality to make his numbers, then who knows, perhaps he can find some way to make money off that. another smart guy is tim sykes, but that is another kind of business model. and again, those people are really smart exploiting the desider of people to make money, don't underestimate what they are doing, that is not trading or generating alpha, but it is selling, and they are selling really well.

This is nice to play around with
http://dqydj.net/sp-500-return-calculator/

If you invested all your money in 1928, before the stock market crashed, and cashed out after ww2 when everyone was quite pessimistic (without adding anything in between), you still would have made a 2.6% return after inflation. This would have been literally the worst period. Right before the biggest crash ever, and cashing out right after a big war. If you would have waited 30 years though and sold in 1958, you would have returned 6.6%.

I think most people invest small bits over a longer period, so then the risk of bad performance is low. As long as you are not an idiot and then don't invest right after the market crashed.

Even if you invested in 2000, and would cash out 16 years later (today), it would have been 2%.

So as long as you think in 20-30 year time frames, and the world doesn't end, you will return at least 2-3% after inflation investing in stocks. And you are extremely unlikely to lose. But since most people add probably a small amount of their salary every year, I'd say you are super unlikely to do worse than 4-5%.

Remember that economic growth comes from people producing things more efficient first and foremost (productivity). This process will not stop anytime soon. And will keep chugging along at 1-2% at the very least.

As a reference look at manufacturing:
https://research.stlouisfed.org/fred2/series/OUTMS
https://research.stlouisfed.org/fred2/series/MANEMP

I would say he is a terrible source to learn from. He basically made a ton of money playing the scumbag frontman for other people who didn't want to take **** for it. The way he handled this whole price increase is stupid. The way he handled himself in the media is flat out ******ed. And he basically has been caught with unethical behavior. He also does not really have an audited investing track record.

He is a dangerous kind of investor because he is not afraid to bet as in the Lehman Brothers case then walk away from his losses. He is not afraid to screw someone. He does not believe in slowly accumulating capital over generations slowly. He says he is making $1 million a month, doing what?

Since 1957 indexing in the sp500 has been shown to beat inflation. Those include dropouts. However there is a lot of trends that may change this. CEOs now come from business schools not engineering schools that believe they are entitled to $1 million salaries. They are not afraid to award excessive stock options. They and their boards are completely in bed with each other. Private equity (raiders) and asses like Warren Buffet are allowed to come in and take any company they want, they can offer little or no markup and even manipulate the stock down to get it even below market value or even free. Furthermore what is the true inflation rate, in the long run it should match the change in money supply.

He works hard, yes, and when you work hard good things happen. He says you need 1000 hours to make an investment, no I can probably beat his hedge fund with 5 minutes per stock, if it even has a return (why could he not pay Lehman off).

He is a CEO of a small company with a proven drug and pumped up the price due to poor written bills written by mainly corrupt liberal or socialist politicians. His claim he needed to raise the price to increase R&D to improve the drug and it was not profitable. No need to pay himself a $500,000 salary to do that!

He also commented that the S&P500 returns are skewed by survivorship bias, which is pretty lol

I've never understood how people think this. Do they think they magically rearrange the composition years later? Or a day later? How exactly do pull this off without anyone noticing?

There are some reasonable views on how weighting has changed so you may want to index in different ways that are more market representative. But how you leap from something like that to "Business no make no money" is wtf.

i have problems taking this guy any serious:

"if you invested all your money in 1928", lol, then when you withdrawl, how do you get the money to spend? do you realize that
a) nobody is invested since 1928
b) you need to withdrawl your money to live (especially when you are retired)

what's the point of indexing, if then you never sell for a profit to enjoy your gain? then when you really need the money you are ****ed, because you'll start eroding your profit or in case the market has a major drawdown (e.g. if you bought in 2000 or 2007) you'd be underwater for a long long time.

PLUS when you'll sell all your "compounded profits" because you need to withdrwal, you will have to pay a hefty sum in taxes

also read this: http://www.marketwatch.com/story/why...ees-2016-03-17


so ****ing annoying that people are polarizing him in genius or scumbag.

again, he is there, he has made ton of money, certainly he is a douchebag, but he knows what he is doing, he made mistakes, yeah, and he will continue to make mistakes, but, i wouldn't have the arrogance to say i'm a better trader/investor than he is, because he made way more money than i've done and that i've ever will (or perhaps i'll made more money than him). and he made those money exploiting the system and using his brain.

Companies that go public (usually) make money. Sure all of them go out of business eventually, but that doesn't mean that they didn't make money for their investors over their lifetime.

like the price of the underlying doesn't mean anything and buying amazon today at $1000 or at $10 is the exact same thing, because eventually they'll deliever something to investors...

c'mon.

it's like when you buy junk bonds with creepy rating, BUT the rating doesn't account for the price, SO you may actually have value in buying a junk bond.

i highly recommend this video: https://www.youtube.com/watch?v=4-uee9RfO6c A Conversation with Howard Marks and Mike Milken

from reading the articles and stuff about the drug price hike etc pretty obvious first impression is he's bad guy etc but spent a little time today reading some stuff and watching some videos where he explains "his side". obviously there's a good chance it's just PR created to save face but he has some points worth considering I guess. regardless the media have definitely misportrayed a lot about everything, if he's telling the truth.

also out of context he seems like a clown but I think if you watch some vids of him doing his live streams/chats it's pretty obvious he's a major troll, pretty funny/entertaining if you see that side. eg http://m.youtube.com/watch?v=HWd4-Z0xBos

That video includes a contradiction by the speaker in the first three minutes. He points out how there are cycles, yet then claims there are feedback loops amongst "investors". Obviously this is impossible. But cranks gonna crank.

Also, are you claiming that in aggregate, all businesses destroy wealth? As in society is no better off from work than 3000 years ago? Or that modern businesses have caused this problem and we're worse off than 200? Or do you randomly attribute all societal improvement to weird benevolence?

lol, i'm not sure if you are serious or you are trolling

a) what is the wrong prhase, at what min, and why, in your opinion? because to me he is just telling how emotions drive the prices and how people fail to realize that trend are not forever.

b) where did i say that?
what do you mean by wealth? wealth for the consumer? wealth for the founder? wealth for the early investors? wealth for the world?

I'm just saying that eventually every business will be shut down, it's a ****ing fact. look at how many original members of the dow jones are in business today. then tell me how much money would you have today if you put money on a bunch of them (GE excluded obv), without ever selling or rebalancing, like the index did.

tell me about when someone thought nokia would never die, and then, the iphone come out, apple boosted its profit insanely, and now nokia is worth 1/10 of what it was worth in 2000... and 1/5 of what it was worth in 2007 before the iphone.

and do you think that apple will be in business, doing what it has been done in this last few years (i.e. selling overpriced smartphone) for the eternity? or, once those sales will shrink -> net income will shrink -> eventually some investors will sell, some will short, because if it was worth 700b when they made 60b in income, it can be worth 700b if they will make 20b in income, with no gorwth. and so, who bought at the peak of 700b valuation, is gaining wealth trough what? dividend? 2% div per year, but stock drops 20%?

Okay. Best of luck in the future. You seem to have a deep and nuanced understanding of how economics and finance work.

Lol

a quick google search shows 11 out of 12 still in business today. not bad.

Care to elaborate on that statement? Let's say that his HF is beating the market by 2%. What type of research are doing in 5 minutes that would yield those results? What are the fundamentals / steps that you are taking? (These questions are purely out of wanting to gain knowledge)

I think his main point is that it's not a great assumption that the market will grow at the same pace in the future, that it did in the previous 100 years.

I'd bet in the future bond and equity returns start to converge. We are only equity obsessed because of their recent out performance.

if you listen to what he says, you'll see that's not the case.


markets are more efficient now and equities rightfully have a risk premium. risk premiums might shrink but there's no logical reason for equity and bond returns to converge.