Crowded Trades Signal Caution in Consensus Investing

14 days ago

Host

"Because here's the uncomfortable truth that you have to know and understand. Smart money isn't always smart. Sometimes smart money is just doing what everything they can do to avoid looking dumb, making the easy choices, and simply following the crowd. Because who could possibly imagine getting fired for owning Nvidia in 2026, even if it fell 50% from here, everybody else owns it. And that's the lesson. When everyone agrees future returns usually aren't going to be as heroic as you would expect."

The speaker highlights the dangerous herd mentality in investing where both smart money and retail investors pile into the same stocks, leading to overhyped valuations. He warns that when consensus is high, future returns may be muted, urging investors to be contrarian and cautious of crowded trades.

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