This is an apparently (?) mainstream econ paper arguing that "value investment" strategies make money because they are contrarian to "naive" strategies, i.e. "dumb money" http://lsvasset.com/pdf/research-papers/Contrarian-Investment-Extrapolation-and-Risk.pdf … .
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For what it’s worth, my perspective is that the end investor is as irrational as ever and that influences the structure and behavior of the mutual and hedge fund industry, who are largely compensated based on AUM.
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The context is that I keep meeting *investors* who think predictable irrationality in financial markets is a thing, and the econ I learned in school said that wasn’t a thing, so I am confused.
End of conversation
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