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114 sats \ 4 replies \ @SimpleStacker 4 Jan \ on: The Death of Value Investing? Benjamin Graham in the Ages of Fiat and Bitcoin econ
Hmm, a couple of thoughts.
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"Publishing formulas and/or acting on them quickly dissipates excess returns." Spot on. One of the interesting things about econ vs. physics is that in physics, what we understand about physical reality doesn't change physical reality. But in econ, what we understand about econ shapes our behavior, which then shapes economic reality.
- The popularity of low cost index funds is especially worrisome and self-referential. Many people have written about whether/how price discovery still works in a model where price movements are dominated by fund flows driven by ETFs that follow simple rules about a stock's proportion within an index.
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Does bitcoin's extreme returns undermine the principles of value investing? I don't think so. The extreme returns are transitory, and part of an information gathering process as people slowly wrap their heads around it. IMO, we are still early because the level of understanding out there is very limited.
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Is value investing dead? If I understand value investing to mean buying underpriced cash flows, then no I don't think it's dead at all. Cash flows (and the expectation of future cash flows, thereof) still reflect an economic reality of value creation. That will never change regardless of whether we are on a fiat or bitcoin standard.
- How appropriate that Soros, Mr. reflexivity himself, got awarded today! #837022
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Oh, I didn't know Soros was closely associated with this idea.
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He is the guy most associated with reflexivity. Hardly unique or original but in the field of finance it's definitely the name and concept that first comes to mind for me
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2. and 3.
Yeah, this is what I see as well
#837546
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