For a good hype campaign or to create a bubble. you have to increase the dependence of your investment thesis on "unfalsifiable" beliefs. This goes hand in hand with giving vague forecasts that are at a minimum 3+ years in the future. If something is unfalsifiable it creates polarization between those who believe and those who do not. It will generally be easy to find those who "believe" with minimal skepticism, push back, or need for empirical evidence--these are the naive suckers you are targeting at first. For those who do believe, when they are threatened with conflicting data or arguments against belief in whatever your investment narrative is, given that their premise is generally unfalsifiable (at least within the next three years), they will typically "double down" on their belief or increasingly shift their reasons for believing more and more towards whatever is most abstract, distant, or unfalsifiable.
Tesla's narrative is going from 30k of annual unit production to 500k by 2020 and then will make "every kind of car imaginable." While one may be able to argue against such a narrative using historic case studies, point out that they do not make money and are missing current production targets, or show how much invested capital such dreams would require, it is not necessarily falsifiable within the next few years, which when following the Laws of Hype playbook, is more than sufficient time for the bubble mindset to set in to allow you to cash in on your inflated stock. Biotech as a whole is easily the most abstract industry and many hype narratives within biotech are based purely on pipelines for future drugs that are 3-5 years out, thus making it perhaps the industry most repeatedly susceptible to massive bubbles.
On February 3rd, 1999 CBS 60 Minutes ran a special on Amazon called Jeff Bezos: The Nerd of the Amazon. In the segment the 60 Minutes anchor Bob Simon states that "the company says its investing for the future." The company was stringing analysts and investors along then as much as they are now stating they had a multi-year time frame to reach profitability...giving them an edge over other public companies and venture capital backed competitors who needed to show profits.
Fast forward 15 years and Amazon is still not consistently profitable, losing $563 million in net income in just the last two quarters. In December 2013 the unprofitable Bezos was on 60 Minutes again in a masterful hype piece the day before Cyber Monday, unveiling the potential for same-day opto-copter drone deliveries. Once again Bezos was talking about investing for future profits, maintaining a vague multi-year time frame in reaching profitability, which is indeed unverifiable and "unfalsifiable."
Bezos discussing the same-day drone deliveries: "This is early. This is still years away...It can't be before 2015. Could it be, you know, four, five years? I think so. It will work. It will happen. It's going to be a lot of fun." This forecast is so vague it's anywhere from 2015-2019 and is thus unfalsifiable within the next three years, allowing gullible investors plenty of time for their imaginations to run wild with all the possibilities. ("can't be before 2015" --remember was said on December 1st, 2013).
This 60 Minutes segment was a great piece of hype. Amazon got tons of press coverage for unveiling the potential for drone delivery, but were so vague about it actually working or when it would begin that they cannot possibly be pinned down to delivering on any "forecasts" and most likely the drone delivery initiative fades into oblivion over the years, if it hasn't already one year later.
"In the long run, if you take care of customers, that is taking care of shareholders." - Bezos. Of course, this is absolutely not true, but it sounds good when stated confidently and in conjunction with unfalsifiable forecasts for future profitability.
"That long term approach is rare enough that it means you are not competing against very many companies because most companies want to see a return on investment in, you know, in one, two, three years. I'm willing for it to be five, six, seven years." In another 15 years from now it is likely that Bezos will be singing the same tune while never giving specific forecasts and statements that can be dis-proven immediately.
Tesla's narrative is going from 30k of annual unit production to 500k by 2020 and then will make "every kind of car imaginable." While one may be able to argue against such a narrative using historic case studies, point out that they do not make money and are missing current production targets, or show how much invested capital such dreams would require, it is not necessarily falsifiable within the next few years, which when following the Laws of Hype playbook, is more than sufficient time for the bubble mindset to set in to allow you to cash in on your inflated stock. Biotech as a whole is easily the most abstract industry and many hype narratives within biotech are based purely on pipelines for future drugs that are 3-5 years out, thus making it perhaps the industry most repeatedly susceptible to massive bubbles.
On February 3rd, 1999 CBS 60 Minutes ran a special on Amazon called Jeff Bezos: The Nerd of the Amazon. In the segment the 60 Minutes anchor Bob Simon states that "the company says its investing for the future." The company was stringing analysts and investors along then as much as they are now stating they had a multi-year time frame to reach profitability...giving them an edge over other public companies and venture capital backed competitors who needed to show profits.
Fast forward 15 years and Amazon is still not consistently profitable, losing $563 million in net income in just the last two quarters. In December 2013 the unprofitable Bezos was on 60 Minutes again in a masterful hype piece the day before Cyber Monday, unveiling the potential for same-day opto-copter drone deliveries. Once again Bezos was talking about investing for future profits, maintaining a vague multi-year time frame in reaching profitability, which is indeed unverifiable and "unfalsifiable."
Bezos discussing the same-day drone deliveries: "This is early. This is still years away...It can't be before 2015. Could it be, you know, four, five years? I think so. It will work. It will happen. It's going to be a lot of fun." This forecast is so vague it's anywhere from 2015-2019 and is thus unfalsifiable within the next three years, allowing gullible investors plenty of time for their imaginations to run wild with all the possibilities. ("can't be before 2015" --remember was said on December 1st, 2013).
This 60 Minutes segment was a great piece of hype. Amazon got tons of press coverage for unveiling the potential for drone delivery, but were so vague about it actually working or when it would begin that they cannot possibly be pinned down to delivering on any "forecasts" and most likely the drone delivery initiative fades into oblivion over the years, if it hasn't already one year later.
"In the long run, if you take care of customers, that is taking care of shareholders." - Bezos. Of course, this is absolutely not true, but it sounds good when stated confidently and in conjunction with unfalsifiable forecasts for future profitability.
"That long term approach is rare enough that it means you are not competing against very many companies because most companies want to see a return on investment in, you know, in one, two, three years. I'm willing for it to be five, six, seven years." In another 15 years from now it is likely that Bezos will be singing the same tune while never giving specific forecasts and statements that can be dis-proven immediately.
RSS Feed