shared a link post in group #The Most Important Thing
2 Things I learned
1) every bubble ensues from widespread conviction.
2) important to look at risks two-sidedly.
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every bubble ensues from widespread conviction.
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Everybody believes A. They bid the beneficiaries of A up to the moon. It turns out it's overdone.
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And people are now convinced AI will change the world.
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I don't know if the future of AI is adequately reflected in the price of the beneficiaries or over reflected.
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because you think their earnings growth will be so rapid, you overweight them, and then it isn't.
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So your large holdings suffer because they didn't live up to expectations.
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But it's really important to look at risks two-sidedly.
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So the corresponding risk is that you don't overweight them, and you don't have a market weight,
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and then they perform earnings-wise as expected, and you're left behind.
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So it's not just what will you do about the risk of a shortfall in anything.
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It's also what will you do about the corresponding risk that there is no shortfall.