In this interview with Bloomberg, Jim Chanos argues that stock prices are opinions based on facts, and that it is important to hear both positive and negative opinions in order to make informed investment decisions. Here’s an excerpt from the interview:
Chanos: You’d be wise to at least hear what they have to say, even if you don’t agree with it.
If it’s well researched and like anything you know stock prices are opinions based on facts. And so at the end of the day it’s essential for a marketplace, whether they’re positive facts or negative facts.
And if you’re a good investor it behooves you to just to basically hear both sides of any story.
Host: We’d be remiss if I didn’t ask for an update from you on Tesla shares up 124 this year.
Chanos: Yeah we are short Tesla. We remain short. It’s one of our 44 positions that we have. Tesla is in many ways I think epitomizes this bull market. It’s a hopes and dream stock. It’s trading at 75 times earnings, which aren’t growing anymore.
It looks like revenues are going to be challenged in terms of growth, so it’s now again an AI story, or Robo taxi story, or a battery story, or a robotic story, it’s whatever you want it to be and it reminds me a lot of Cisco back in 1999 amd 2000 where Cisco was a networking company, Tesla is a car company, but Cisco was going to get into everything else that had anything to do with the internet.
And people put a higher and higher multiple people on it and ultimately Cisco did okay but the stock price dropped 90 percent.
You can watch the entire discussion here:
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One Comment on “Jim Chanos: Stock Prices Are Opinions Based On Facts, So Be Sure to Hear Both Sides”
Usually I would not comment on this kind of interview but it is so preposterous that it warrants a comment. My experience only dates back to the late sixties, but since then empirical evidence indicates that very few opinions on stocks are based on facts. Value investors make living knowing that the opinions of market participants are dead wrong and not based on facts.
Using his Cisco example, after it dropped 90 percent I did buy it in 2011 for $14 because it was then below intrinsic value. Market participants were dead wrong again. I did sell late last year at $60, still well below the 1999 high. Listening to people who have no understanding of the facts is a total waste of valuable time.