Reversal Of Fortune

2025-04-23 07:30:00 ET

Summary

• This pattern of buying high and selling low is why most investors underperform the inflation rate.
• We have more numerous and more dramatic deviations from fair value today than we have experienced at almost any time in history.
• Here I will list some of the most important assets which have wildly strayed away from fair value and are thereby providing unusually compelling profit opportunities.

Most investors buy whatever is trendiest at any given time and sell whatever has underperformed in recent years. This pattern of buying high and selling low is why most investors underperform the inflation rate and would do far better in "boring" TIPS and I Bonds. Because it has been so easy in recent years to obtain mostly free reliable research on the internet, you would think that most investors would understand the concept of fair value, and through their collective buying and selling, would ensure that no asset strays far away from fair value. Instead, we have the opposite situation: the ability to continuously track key data and to act almost immediately based upon that information has caused far more emotional piling into the most popular assets and panicking out of those which are the most out of favor. As a result, we have more numerous and more dramatic deviations from fair value today than we have experienced at almost any time in history....

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