I got great, consistent feedback from people who actually know finance that you cannot currently make 11% returns a year by value investing.
I’m curious about testing what I might call the “cool guy” theory of investor irrationality — that people give money to whoever they perceive as cool, which is defined by who other people think is cool.
(If there’s a real name for this I’m not familiar with it, though it does sound like Keynes’ “beauty contest” concept.)
Sounds like if most money is following “cool guy” dynamics, then momentum & value premiums should be a big thing; if plenty of investors are willing to be “contrarian” then they won’t. Does that sound correct?
Also, if “cool guy” dynamics are prevalent, we should see lots of “runs” of stocks going steadily up and then crashing, at whatever the timescale of social narrative moves at (months?). Ie they should have a preferred timescale instead of being true GBMs. Does *that* sound right?
