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The longer I’m in the market the more I realize George Soros was completely correct with his theories on reflexivity. > Reflexivity theory states that investor
by JohnJamesRambo 5y ago
The longer I’m in the market the more I realize George Soros was completely correct with his theories on reflexivity.
> Reflexivity theory states that investors don't base their decisions on reality, but rather on their perceptions of reality instead.
Meme stocks, Covid crash, Tesla stock, the SP500 for the last decade, NFTs. None of it is priced correctly because humans are at heart greedy, fearful, irrational. I think the trick is to figure out how to use that to make money.
- reducesuffering 5y agoThere's quite a bit of academic literature on the long term overvaluation and underperformance of "growth" and especially "small cap growth" stocks, sometimes explained by their popularity as pseudo lottery tickets. Over almost all rolling 25 year periods across the past century, "value" stocks (the X% of the market highest in current earnings, cash flow, etc.) outperform the broader market including these growth stocks. Search "the black hole of investing."