4 ms·
I think you're assuming a level of market rationality that doesn't exist IRL. In practice, certain industries have tended to be more profitable than others... e
by netcan 5y ago
I think you're assuming a level of market rationality that doesn't exist IRL. In practice, certain industries have tended to be more profitable than others... even long term.
Same for stock. Apple & MSFT's stock price does, in theory, "price in" their tremendous revenue, growth potential and profitability. But.... This was also true 10, 20 & 30 years ago. Yet, investments in tech companies over those years did yield market beating returns.
I think that for tobacco and other cash crops, it helps that it's relatively durable and that the market is quality oriented.
- Closi 5y ago> Apple & MSFT's stock price does, in theory, "price in" their tremendous revenue I think this is easy to say in hindsight, but 10-20 years ago it was not at all obvious that Microsoft or Apple would be where they are today (even as recently as 2014 the outlook of Microsoft was very different than it is today). Besides, potential future revenue is different to actually achieving it - 30 years ago companies like Commodore, Amstrad and Gateway all had tremendous growth forecasts, and maybe in an alternative universe would be the dominant players today, but history favours the winners and is always obvious in hindsight.
- nradov 5y agoYou appear to be confused by survivorship bias. Look back 10, 20 & 30 years ago. You'll find many other tech companies which underperformed, or completely failed. There was no reliable way to predict at the time that Apple and Microsoft would do especially well. Some long term investors who guessed right got very wealthy, but that was mostly just luck.