Thursday, April 14, 2016

Peter Thiel: Everything Is Overvalued

The founder of Paypal and the first outside investor in Facebook spoke with Bloomberg this week and said he feels like just about everything is overvalued. Here was the key line;

"If there is a bubble it is probably centered on the zero percent interest rates, the quantitative easing, the money printing and that's a very strange one because it permeates everything

Amazon's Jeff Bezos On Failure & Being Bold

My wife told me yesterday Amazon is now offering same day shipping for online orders in our city. Same day means if you order in the morning it will be there that afternoon. The disruptions Amazon continues to create in the retail world are staggering.

I also came across this great piece from Amazon's letter to shareholders this week on failure and swinging for the fences (emphasis mine).

"One area where I think we are especially distinctive is failure. I believe we are the best place in the world to fail (we have plenty of practice!), and failure and invention are inseparable twins. To invent you have to experiment, and if you know in advance that it’s going to work, it’s not an experiment. Most large organizations embrace the idea of invention, but are not willing to suffer the string of failed experiments necessary to get there. Outsized returns often come from betting against conventional wisdom, and conventional wisdom is usually right. 

Given a ten percent chance of a 100 times payoff, you should take that bet every time. But you’re still going to be wrong nine times out of ten. We all know that if you swing for the fences, you’re going to strike out a lot, but you’re also going to hit some home runs. The difference between baseball and business, however, is that baseball has a truncated outcome distribution. When you swing, no matter how well you connect with the ball, the most runs you can get is four. In business, every once in a while, when you step up to the plate, you can score 1,000 runs. This long-tailed distribution of returns is why it’s important to be bold. Big winners pay for so many experiments."

Selling Too Soon