I expect that many of us here also lurk or post over at Saul’s. I’ve been relaxing in the bleacher seats, observing the panic versus stiff upper lip contest. The devout and the Doubting Thomases. All this talk about valuation. Overvalued. Undervalued. DCF. % below ATH.
Sometimes, discussions/arguments ignore the possibility that the bone of contention is imaginary. Maybe most of the time. Is value imaginary? I think that Dreamer’s long standing contention that the SaaS stock prices were overvalued is partially based on the realization that in realty, Value is a phantom. In the words of Forrest Gump, “Stupid is as stupid does.” Value is as Value does. Value is what the amorphous blob we call “The Market” says it is. Particularly with regard to hypergrowth stocks whose foundational DCF is based on unknown unknowns of 2026. Throwing rocks at the moon.
My sanguine period ended about down 25% ago. There is no Bottom, as in a swimming pool. Bottom is more like quantum mechanics, which I understand to about the same degree as I understand DCF. I know there will be a bottom. The bottom will be when stocks are traded so far below Value that Greed overcomes Fear just as Omicron is overcoming Delta. I don’t know when that will be. More importantly, where will Greed subsequently drive the price. Higher than the previous High? Eventually, absent the mother of all Black Swans.
None of the above begets a Plan. But the idea that SaaS will return to former glory requires a number concepts that are faith based. One, Market will once again embrace the shining city on the hill–90% gross margin and 60% revenue growth for ever and ever, or at least until I am too rich to care or have died–even if the companies never turn a profit. Two, that the technology of these companies isn’t made irrelevant by something even better than AI or whatever. Three, well, I could list things that go bump in the night for quite some time, but it does boil down to the Blob’s view of companies doing the 90%, 60% thing.
Therefore, as I can embrace my possibly correct understanding that I have of UPST’s business model and hold to the idea that lending/borrowing will extend beyond the 3,000+ years of their existence, as far as my feeble eyes can see, I am more comfortable with investing there than in projecting the fortunes of CRWD’s internet security tools, zs’s endpoint protection, NET’s 4th cloud, MNDY’s…, DOCN,s… Not nearly as all-in as Dreamer’s SPG holdings last year, but very high–while still holding those other names.
Without any degree of certainty, I will soon be 100% invested with the belief that next January these will “all” be higher than today.
The End. Sort of. I am out of airspeed, altitude and ideas so will press on with my… (check spreadsheet) (shouldn’t have looked) 27% cash. Currently almost 16% in UPST. Would I go to 43%?
Stay tuned, should you give a rat’s arse.