It's tiresome hearing the word "Ponzi" misapplied to speculative asset bubbles. If Peloton paid a dividend out of investor money, <i>then</i> it would be a Ponzi scheme. Right now it's just a (probably) bad investment. The difference is material.
Really hate imprecise language, a Ponzi scheme is literally a fraud predicated on bringing jn a constant supply of new investment dollars to pay the earlier investors (fraud because there either is no underlying asset at all (Madoff's returns) or its value is fraudulently misrepresented to investors (the original scheme by Mr. Ponzi himself))<p>It is not<p>* speculation or "asset bubbles" (I don't believe in bubbles, but they are definitely not Ponzi schemes)<p>* MLM / pyramid schemes (although these can also be Ponzi schemes, usually when the promised levels of operational support, marketing, product dev, etc. aren't honored)<p>* pump and dump / option manipulation ( these can be fraudulent, but they're not Ponzi schemes - they don't require a steady flow of investors to sustain themselves - in fact, one large institutional investor can be sufficient)
This article seems built on a foundation of 20/20 hindsight. It would be more credible if it pointed out examples that haven't (yet?) dropped dramatically.
> There is even an “anti-ARK” ETF––the Tuttle Capital Short Innovation ETF (SARK) launched two weeks ago––that tracks the inverse performance of the ARK Innovation ETF through swaps contracts.<p>From
<a href="https://www.barrons.com/articles/cathie-wood-ark-invest-short-selling-51637788917" rel="nofollow">https://www.barrons.com/articles/cathie-wood-ark-invest-shor...</a>
"Ponzi" isn't an apt name for stocks that can't turn a profit. They're just inherently bad ideas with hype.<p>That said, this is a good article and definitely presages bad times ahead for growth stocks. Not just the unprofitable ones. (I've been modestly cycling out of growth and into value and cyclicals.)<p>Any advice on stocks to short?
Not much unique information here.<p>TLDR: Ponzi schemes are bad and unwind quickly. They can take the form of "normal companies". Peloton being one example (according to the author).<p>What's more interesting to me is just because a company may be a Ponzi scheme - which is bad for investors - doesn't mean the products are bad for consumers. It's almost like a wealth transfer instead.<p>Investors support a business that consumers buy into, the investors get wiped out once the company unravels and lose, but the consumers who bought use and continue to use the products get to keep the product - assuming in this concrete case that Peloton doesn't lock everyone out remotely.<p>This doesn't mean the company is bad, just that it's a bad investment. The product can still be extremely successful and useful.<p>Does this mean the company failed to deliver value? Depends on who you ask. The consumers who bought the products will say no. Only the investors will say yes.<p>Companies exist for reasons beyond returns to investors. They should aim to be sustainable, but if they're not, it doesn't necessarily mean they're a "bad" company.