Much as we might prefer otherwise, the market price of every listed equity investment is an amorphous blend of human behaviour, macroeconomic and corporate fundamentals. Share prices do not conform to a precise mathematical theorem. Investment returns over any period will comprise an element which reflects investors’ assessment of the short and longer term earnings power of a business and an element which reflects the equity market popularity contest. The separation of luck and skill in the process of investing will remain arbitrary, and anyone suggesting luck does not play a significant part is either disingenuous or delusional. When share price gains are wildly outpacing the rate of value creation, margin of safety is declining sharply. These rules are simple, but behaviour is powerful. FoMO (Fear of Missing Out) can, and has, overshadowed economic value for some time as momentum has ruled. It will not always be this way. You can read further at “Taking Stock: FoMO & the lure of outsized gains” (VIEW LINK)


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