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8/6/24, 12:00 PM After latest market meltdown, will investors actually learn anything new? | Analysis – Gulf News
While I will refrain from commenting on the more egregious examples of meme stocks,

say what you want of these three price points, you can’t say that they were flying below

the radar. These were as intensely scrutinized as any market components can be, by
some of the shrewdest people on our planet. And perhaps, on some other planets too.

There was a long held commentary that Bitcoin was perhaps the most visible example of

financial overvaluation. That with all the hype surrounding AI and tech, blue-chips like
Intel were under obvious distress. And yet billionaires from all over were long and

calling for much higher levels, pushing the carry trade on through endless layers of

leverage.

Two weeks later, with the bulls running for cover (given no new material information,

other than the fact that Berkshire had increased their cash holdings to a record high),

there seems to be a new dawn. Which raises the obvious question: if the most efficient
markets can get it so wrong about something that is in plain sight, how can it get it right

about more esoteric concepts like AI? Or for that matter the analysts and the firms that

recommend them?

If it doesn’t, how can any responsible investor buy shares based on these

recommendations? At what point does the purchase of such overvalued stocks cease to

be intelligent investing and become the crudest form of gambling?

There is of course an obvious reason and that is that the insiders themselves don’t
understand them either. Despite the repeated insistence on data that they claim to have

(rising transaction levels, anyone?).

Highly opaque markets

Across trading floors, time and again, there is an obvious tendency to emulate trading as

an abstraction of birds flying, which is another way of saying follow the crowd at chow

time.

For both investors as well as analysts, markets - in real estate or capital - have become

shockingly opaque. This problem isn’t new. It dates back to the South Sea Bubble, when

one company started making more money than all the others combined.

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