"The Riff" with Byrne Hobart and Erik Torenberg E45: Efficient Market Hypothesis, Missing Billionaires, and Digital Currencies
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Sep 12, 2024 Delve into the nuances of market efficiency and how technology has reshaped investment strategies. Explore the high-stakes ventures of tech giants and the complexities of valuing their innovations. Discover the evolution of currency from dollars to digital gems and how psychology drives consumer behavior. Additionally, weigh the risks of concentration versus diversification in investment strategies and reconsider the evolving role of portfolio managers in today’s financial landscape.
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Market Efficiency Trends
- Markets are generally becoming more efficient over time due to increased data and better evaluation methods.
- However, some statistical measures suggest otherwise, like stretched valuations of growth stocks compared to the dot-com bubble.
Strategic Investments in Big Tech
- Big tech companies often invest heavily in long-term strategic projects that may temporarily lower their quality rankings.
- These investments, like Waymo for Google or Reels for Meta, can eventually become significant tailwinds.
Meta's Early Mobile Investment
- Meta (then Facebook) invested in mobile development as early as 2006, demonstrating their forward-thinking approach.
- This was even before the iPhone launch, highlighting their early recognition of mobile's importance.