Tangled web

But even an Internet tree doesn’t grow to the sky. On the basis of share price returns, investors have been justified, to date, in buying the so-called FAANGs – but they were never justified in paying literally any price for the privilege. Nor were those fund managers cheerfully loading up the truck with them justified in building a position of literally any size within their funds. There is such a thing as prudent risk management even when it comes to high growth Internet stocks, and appropriate position sizing is a component of it. Clearly it’s easier to cast caution to the winds when you’re an economic agent with next to no skin in the game, playing with other people’s money.

1 August 2018