Never let a good story make you pay a bad price!
The market today isn’t all that different from a TikTok feed — stories fly at you fast, polished, and convincing. AI will change everything. Self-driving cars will rule the roads. Space rockets will carry us all to Mars. Each pitch is dressed up like the future has already arrived, and all you have to do is “get in early.” But the truth is simpler: a story isn’t a business model, and hype doesn’t equal profit.
At the end of the day, the scoreboard isn’t kept in headlines or hashtags — it’s in cash flow and earnings. Stories can pump stocks sky-high, but gravity always shows up. So when you’re tempted by the next big thing, pause and ask: is this a company, or just a bedtime story for adults with brokerage accounts? Don’t mistake the trailer for the movie — and don’t mistake the hype for the payoff.
The Story Trap
A good story can sell almost anything. It can light up your imagination, make you picture a future where machines think for themselves, cars drive without you, or rockets carry us off to new worlds. But here’s the truth: a good story doesn’t make it real, and it sure doesn’t make it a good investment.
AI, self-driving cars, space travel—yes, they’ll all happen. Progress always marches forward. The question isn’t whether these ideas come true. The question is: will they be profitable for you as an investor?
This is where most people trip. They hear the story and confuse it with value. Wall Street knows this, and it packages stories like candy—sweet, exciting, and almost always overpriced. You aren’t buying the story; you’re buying the numbers behind it. And if the numbers don’t line up with the price you’re paying, you’re not investing. You’re speculating.
Warren Buffett has been reminding us of this for decades. In the late 1960s, he shut down his partnership because he couldn’t find anything worth buying. In 1999, when tech stocks soared, people laughed at him for sitting on cash. Then the bubble popped. In 2008, he swooped in while others panicked, because he had the patience to wait for value. Today, he’s sitting on over $344 billion in cash—not because he’s predicting a crash, but because everything looks too expensive.
The lesson isn’t complicated: Price is what you pay. Value is what you get.
A Ferrari is still a Ferrari, but pay too much for it and you’re a sucker. A thousand-dollar iPhone might be the best phone in the world, but that doesn’t mean you should buy Apple stock at any price.
The same applies to every “story stock” that’s captured headlines over the last century: airlines, cars, dot-coms, cannabis, EVs, AI. The stories are dazzling, the industries are real, but most of the companies within them fail. The few that survive are rarely priced cheap enough for early believers to earn the fortunes they dream of.
So when you’re tempted by the next big story, stop and ask: if the dream comes true, what will this company actually earn—and is today’s price fair for that future? If the answer is no, you’re not investing. You’re buying a fairy tale.
And fairy tales, no matter how good the story, rarely end well for investors.
Here are several famous examples of companies / stocks that once looked like can’t-miss opportunities—great stories, lots of hype—but didn’t deliver, or failed miserably. These are cautionary tales of “story > reality.”
Notable “Story” Stocks That Failed
| Company | What the Story Was | What Went Wrong / Where It Failed |
|---|---|---|
| Nikola | EV + hydrogen trucks; seen by many as a future leader, raised huge valuation. (Business Insider) | Accusations of fraud, misleading claims; founder resigned; eventually filed for Chapter 11. (Business Insider) |
| Beyond Meat | Plant-based “meat revolution” riding trends around health & sustainability. (IG) | Stock spiked early, then dropped over 90% from its highs as profits were elusive, competition increased, demand decelerated. (IG) |
| Fisker | Ambitious EV start-up, promised sleek design and high volume; many believed it could be “next Tesla.” (Wall Street Journal) | Production & delivery delays, software issues, financial mismanagement; heavy losses; struggling to execute. (Wall Street Journal) |
| Theranos | “Revolutionary blood testing tech” that would test many diseases from tiny amounts of blood; huge valuations; celebrity backers. (Wikipedia) | Its core claims were false; regulatory & legal issues, tech didn’t work as promised; company dissolved, investors wiped out. (Wikipedia) |
| Cannabis Sector (e.g. Canopy Growth, Tilray & others) | Legalization wave + recreational/medicinal use = huge revenue, big profits, massive growth. (Financial Times) | Over-supply, regulatory headwinds, black market competition, high costs, unmet expectations; many companies’ valuations cratered. (Financial Times) |
| Vinco Ventures (“TikTok killer” hype) | Promoted itself aggressively as the next big thing in social media / content / short video; many thought it was poised to dominate. (Business Insider) | Found to have misled investors; failed to live up to announcements; collapsed and delisted. (Business Insider) |
| Poseidon NL (Poseidon bubble) | Discovery of a “massive nickel deposit” led investors to believe mining shares would skyrocket. (Wikipedia) | After the speculation peaked, prices crashed; the company eventually went into receivership and lost value dramatically. (Wikipedia) |
| Comverse Technology | High hopes as a tech provider in telecom & voicemail services; seen as rising star & part of Israeli tech boom. (Wikipedia) | Missteps in management, accounting scandals, over-promising; eventually delisted and broken up. (Wikipedia) |
| Excite@Home | Promised to combine content + high-speed internet access; seen as a leader in the “new media / broadband” age. (WIRED) | Internal strategy failure, market competition, economics didn’t work; stock collapsed from high valuations to pennies. (WIRED) |
Overhyped Stocks
| Stock / Theme | Current / Trailing P/E (TTM) & Forward P/E | Why It Looks Overhyped / Risky | What To Watch For |
|---|---|---|---|
| Tesla (TSLA) | • Trailing P/E (TTM): ~ 225-250×. (Macrotrends) • Forward P/E is lower (but still very high) — often in the ~160-200× range depending on estimates. (Yahoo Finance) | Tied heavily to hype: robotaxi, full-self driving, AI, etc. Expectations are extreme, and Tesla must deliver perfection on many fronts to justify this P/E. Any misstep or delay hits hard. | Watch if earnings grow to match price expectations. Monitor margin pressure, EV sales vs competition, regulatory risk in autonomy, execution on AI/robot projects. If forward P/E doesn’t compress (lower) over time via earnings growth, risk rises. |
| Nvidia (NVDA) | • Trailing P/E (TTM): ~ 49-52×. (Macrotrends) • Forward P/E: around 41× in many estimates. (Nasdaq) | Compared to TSLA, much “cheaper,” but still elevated vs many historical tech/multiplier norms. A lot of performance is expected to come from AI, GPU demand, cloud, etc. If growth slows or competition / regulation heats up, multiples are vulnerable. | Keep an eye on margin trends, global chip supply and export issues, customer concentration, how much NVDA must invest to sustain growth. If forward P/E drops or guidance is cautious, that’s a warning. |
| Palantir (PLTR) | • Trailing P/E: ~600-610×. (Yahoo Finance) • Forward P/E: estimated ~200-250× sometimes. (Yahoo Finance) | Basically, almost all the optimism is baked in. The story of AI / data contracts / gov business has to perform near perfectly for that P/E to make sense. Very little margin for error. | Watch revenue growth vs profitability, ability to scale commercial business, contract renewals, competition, and whether there is margin compression. If forward P/E fails to drop significantly vs trailing, then expectations are too high. |
| Oracle (ORCL) | • Trailing P/E: ~70-72×. (Yahoo Finance) • Forward P/E: ~43-45×. (GuruFocus) | Oracle has leaned heavily into the AI / cloud narrative. Its contracts, infrastructure build-outs, etc., are part of what investors are buying. But again, with a TTM PE ~70×, many of the future gains are already priced in. If earnings fall short, downside risk. | Watch how its cloud / AI infrastructure margins behave, how much capex is required, whether earnings estimates hold up, and competition from AWS/Azure/Google. Also, see whether forward P/E comes down as earnings ramp. |
| Thematic / Sector Hype (EVs, Robots, etc.) | Varies widely; many companies in this category have extremely high P/Es (or negative earnings now), or forward P/E that assume very high growth. Some are loss-making => undefined or negative P/E. | These areas tend to attract speculation. Many participants expect huge growth; many fail to deliver. High cost required to build factories, supply chain, regulation. Valuations often assume success across many fronts. | If a firm in this theme has a reasonable P/E (versus competitors, vs its own history), that might be better. Check how many are burning cash, how long until profitability, barriers to entry, regulatory risk. |
Bitcoin-Related Stocks / “Crypto Proxy” Names
These are companies that either mine Bitcoin, operate exchanges, hold Bitcoin in treasury, or are otherwise tied to the ups & downs of crypto. Their risk tends to be amplified by crypto price swings. Below are a few names & what to watch.
| Name | How They’re Tied to Bitcoin / Crypto | Recent P/E / Valuation Notes & Risks |
|---|---|---|
| Marathon Digital (MARA) | Major Bitcoin miner. Its revenue and earnings largely depend on Bitcoin’s price, mining costs (electricity, hardware), regulation, and miner competition. Also holds Bitcoin in treasury. (Wikipedia) | Trailing P/E: ~9.8×. (Yahoo Finance) Forward P/E: often not defined or highly variable depending on crypto cycles and future earnings estimates. Risk: their cost per bitcoin mined, energy expenses, hardware depreciation, regulatory pressure (e.g. power, ASIC export bans), and most importantly, BTC price drops severely affect revenue. |
| Bitcoin Depot (BTM) | Operates Bitcoin ATM kiosks, etc. More of an infrastructure play exposed to crypto adoption & regulation rather than mining or treasury. | P/E ~ 39-40× (most recent) per available data. (Macrotrends) Risk: revenue depends on transaction activity; high overhead / regulations; exposure to entire crypto sentiment cycles. |
| Other “Bitcoin treasury / proxy” companies (e.g. MicroStrategy (MSTR), Coinbase (COIN), Riot Platforms (RIOT)) | MicroStrategy holds a large BTC reserve, so it is heavily tied to Bitcoin price. Coinbase makes money from trading fees / market activity, which surge when crypto is volatile but also fall heavily when crypto markets are down. Riot and miners depend also on BTC price plus mining difficulty, costs. (Wikipedia) | Specific P/E metrics vary: many are loss-making during certain periods so P/E is negative / undefined often. Example: Riot currently has negative or very volatile P/E metrics. (Wisesheets) For Coinbase, when business is strong & trading volumes high, P/E can look “reasonable,” but forward P/E & profitability are very sensitive to crypto cycles. Risk: regulatory risk, extreme volatility of BTC/crypto prices, mining energy cost, hardware capex, dependency on macro & sentiment rather than steady business fundamentals. |
What the P/Es Are Telling Us
- When you see a P/E in the hundreds (or trailing P/E in the hundreds), expectations are massive. The market is pricing in very strong growth, little margin error, often years of “perfect execution.”
- A big spread between trailing P/E and forward P/E suggests people expect earnings to grow fast relative to recent earnings—but that also means if growth falls short, a lot of value will get knocked off.
- Stocks tied to crypto often have wildly fluctuating (or negative) P/Es, because earnings depend a lot on volatile inputs. Those are not safe “story” plays.
- Elevated P/Es are not automatically bad if growth is real and margins are improving—but the risk is high. When everything is assumed to go right, just a few things going wrong (competition, regulation, tech delays) can cause big downswings.
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