Uber nichts

Finally, after years of tease and denial, the unicorns are going public. These phenomenally valued firms, pumped up by venture capitalists (VCs), remained private for far longer than they did in previous startup manias, most notably the dot.com bubble of the late 1990s. That’s changing. A bit of history. In August 1995, Netscape, maker of one of the first web browsers, sold stock to the public for the first time. (Until then, it had been backed and owned by a small circle of managers and VCs.) Initially priced at $14 a share,… Read More

Fascists are good for stocks

Investors are looking forward to the inauguration of the terrifying fascist Jair Bolsonaro as president of Brazil on January 1. And they look to dreading the inauguration of the moderate social democrat Andrés Manuel López Obrador (aka AMLO) as president of Mexico on December 1. Graphed below are indexes representing the two countries’ stock markets—or, more specifically, shares traded on the New York Stock Exchange designed to mimic those indexes. (The history of the Mexico index is here; of Brazil, here.) The top graph is a long-term view. It shows that the two… Read More

About that stock panic

Stock markets have stabilized, at least for now, after a few days of what the press likes to call “turmoil.” What does it all mean? There’s no doubt that stocks have been due for a comeuppance for some time: they’re very expensive. Since stocks represent claims on corporate profits, present and future, the conventional way to value them is by measuring their price against those underlying profits (or “earnings” in Wall Street lingo, since to the owning class, profits from capital are just like wages for labor: as they like to say,… Read More