In heady times, capital is devoted to... - Deepstash

  • In heady times, capital is devoted to innovative investments, many of which fail the test of time. 
  • Hidden fault lines running through portfolios can make the prices of seemingly unrelated assets move in tandem. 
  • Psychological and technical factors can swamp fundamentals
  • Markets change, invalidating models.
  • Leverage magnifies outcomes but doesn’t add value. 
  •  Excesses correct. When investor psychology is extremely rosy and markets are “priced for perfection”— based on an assumption that things will always be good— the scene is set for capital destruction.

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