Popular Assets Make Poor Investments

[Part-Time Chad]

Asset is unknown= best returns

Asset is ignored= great returns

Asset is hated= good returns

Asset is loved= poor returns

 

[Gonthar]

 

[_MVP_]

is balanced out by poor probability of good ROI

efficient market strikes again

 

[Part-Time Chad]

is balanced out by poor probability of good ROI

efficient market strikes again

Exactly. Another way to put it is that risk and return are intimately correlated-- the more unknown or hated an asset is, the less consensus there is that it will go up in value. Hence it is more risky to make a contrarian bet on it. But if you get it right, you're essentially getting in early (on the 'ground floor') and will enjoy outsized returns as a result.

 

[Part-Time Chad]

JFL, this principle works for females too-- the more attractive and in demand a woman is, the less you're likely to get from her.

 

[Part-Time Chad]

This is why no one is getting rich from cryptocurrencies anymore. My own crypto portfolio has been stuck between $150k-$400K for years now. If this was 2016, when few people knew about cryptocurrencies, my returns would have been exponential, and I'd be rich and retired right now.