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what this means for the value investor is that they should seek to buy things that have underestimated growth potential or underestimated time horizons. this is not simply to buy companies that have no ego. it is to buy companies that have a HEALTHY ego.

ego is NOT bad. projecting into the future and having some sort of plan is good. the only way to optimistically believe in yourself is to first HAVE a self.

internally a healthy ego is confident while externally underestimated. an unhealthy ego is either arrogant or internally underestimated (anxious, depressed, etc...)

a depressed ego never grows because it can't believe in a future. an arrogant ego is pricing itself too much into the future. it's like taking out a huge line of credit and feeling rich instead of in crippling debt.

a bubble popping is when the story of the future encounters something it can't integrate. the STORY pops taking out all of the present perceived value because so much of that value was stored in the future story.

this model can then lead to a new type of rebalancing philosophy. older philosophies include ideas like: 60/40 stocks bonds or 1:1:1:1 stocks:bonds:gold:cash or long volatility vs short volatility

in this newer philosophy a portfolio is like a ship, sailing into the unknown. when the seas are rough, you rebalance into things that have value mostly in the present. when the seas are calm, you can let down the sails and increase speed.

when seas are disastrous what you want are things that have a strong expected future. iphones may die but corn will be eaten. governments may fall but gold will always be shiny.