I genuinely wonder this. Before everyone thinks ok boomer or that I'm some value investor dumping my entire net worth into BABA I'm not. I'm asking on a theoretical level.
In the past, valuations and fundamentals have mattered because the big institutions and the average retail investor thought they mattered. Even algos, which on some level were active at the onset of the 80's were programmed and directed to sell off stock when the valuation became too absurd.
But when I look at the Rivians and Nikolas of the world I start to think maybe they're just a symptom of the larger mentality of the market, including institutions, including the algos that are programmed by humans that have normal human biases.
Theoretically, if the larger consensus of the market.. from institutions to retail to the programmers making algos, was that only future potential growth mattered and nothing else, wouldn't that theoretically mean that only growth and hype stocks would have growth and interest forever?
I mean on a purely theoretical level, if we reached a point where it was a consensus by the vast majority of investors from all levels and backgrounds was that speculation and growth wins the day, wouldn't the market reflect that?
What I mean to say is the market can be a reflection of the risk appetite of the broad spectrum of humans investing and trading in it, and if that were to slowly shift would it be possible that value stocks or old blue chips are largely forgotten forever, or have a bad return versus hype/speculation/growth moving forward?
If no one is a Warren Buffett anymore, why would Warren Buffett-esque stocks have any market beating returns? No one would invest in them (on a level compared to hype/speculation stocks). They'd just theoretically sit there at low valuations forever paying out dividends and what not, with their only real growth being from stock buy backs.
Just a musing I had.
Submitted November 14, 2021 at 05:36AM by Stacks_McDividend https://ift.tt/3FeFDqN
