Unicorn world is clearly absurd
There’s no kind way to say it. Unicorner of stock market is batshit crazy. No amount of FY41 estimates can paper over this self-evident truth. Bull case is euphemism for fairy-tale. Revenue multiples for philanthropic organizations look more egregious than PE multiples. Path to profitability requires Pixar-esque imagination, especially as management thinks it’s optional. Absurdity isn’t limited to IPOs, stock markets or valuations. Unlisted market is crazier. Amounts raised and burnt are nuts. Frequency of fund raising is dizzying, as is deployment of funds. Some iffy company with an unproven core business making a transformational acquisition every Amavasya gets cheers, not therapy.
But there’s always absurdity somewhere
Absurdity is neither new nor rare. We see it all the time, not just in tech where ‘this time is different’ sounds more plausible every time, at least until the crash. We’ve seen it in shitty old sectors like real estate, infra and global commodities. Some segment of lending is frothy all the time. It’s always BNPL somewhere. Fin-tech is just a label for this iteration of shoddy lending. Crypto mania makes unicorn world look like Dravid. In calling Mr Market manic-depressive, the smartest among us merely pointed out the obvious: absurdity, not normalcy, is the default.
And absurdity can last painfully long
Dotcom felt absurd in 95. Even Alan from la-la land felt so in 96. It took a frustrating half a decade for poetic justice to set in. That’s a lot of time for undiscerning idiots to look smart, while the greatest was called a luddite. Absurdity usually lasts long enough for last-man standing to throw in the towel. Even the strongest can only take so much of nitwits with punchable faces raking in fees and fame, while any attempt at thought looks stupid.
So, calling absurdity is meaningless; and definitely not a call to action
That unicorner is absurd doesn’t mean that I can or will something about it. I’ll not bet against it. I’m not short anything. You shouldn’t be either, at all times. I’m not calling a top. I have no idea how far away a top is or even what it will look like. As with dotcom in mid-90s or Unitech in mid-00s, this sort of thing can feel absurd years before collapsing under the weight of its own contradictions. If history is a guide, absurd only becomes more absurd to the point where we reminisce about how normal early absurdity was. There’s simply nothing to do, other than rant, mock, watch, and likely cave in.
At best, it’s a call to inaction
For a few fuddy-duddy folks like me, who can survive looking stupid, absurdity is a no-entry sign. If risk, quality and value are filters, it’s not hard to figure that anti-risk, anti-quality and anti-value are avoidable. It can get psychologically hard to sit it out, but intellectually, answer is clear. It’s too late to become someone else or live with two personalities. I’d rather channel midlife crisis into a less dangerous hobby. Sure, it’s painful to see inveterate idiots take victory laps. But it’s a good time to get philosophical and remind myself that life’s dealt me a fantastic hand. Why let envy ruin it?
If it’s pointless, why call out absurdity
Because it’s important for someone to say it as it is. Especially because fog of self-delusion will only get worse. Analysts are already forecasting financials till Halley’s comet shows up. It’s hard to tell research from science fiction. I’m not singling out analysts, as seduction of stories, fees and gains makes it impossible for any market participant to not go with the flow. There’s too much career risk in calling out naked emperors. Skepticism and year-end bonus don’t go together. Anyone who is in on absurdity, in whatever small indirect way, has no option but to feign belief. Evangelists defending the indefensible are already cringe-worthy and will get puke-worthy.
Since I am lucky to be somewhat insulated, I might as well use it to speak bluntly. Ergo, this rant. This is nuts. It will likely get nuttier. Yes, I don’t get it.