🐈

just as dripping water bores through rock, asset rotation/rebalancing gradually increases the value difference between "good" ideas and "bad" ideas (in theory)

e.g. take gamestock. the "smart" risk takers will make a lot of money. that money then 'smartly' goes into other assets. the "dumb" risk takers who don't get out in time don't have money. thus the allocation efforts over time gets "smarter"

in practice there is a lot of luck and group think involved. e.g. the musk fanatic who dropped everything and yoloed into doge the moment the first tweet dropped made the most the smart risk taking being incentivized also may just realize pumping ponzis is the "smartest" way