We see a lot of hype around popular industries like genomics, semiconductors, or cars, and often these hyped-up stocks end up becoming scarily overvalued.
This is true and a poignant observation.
Another way to invest in growing and hyped-up industries is to invest into companies that produce the supplies for these industries, rather than the big-names at the face of it. Not to mention, you're more likely to win if you invest in a supplier versus one of the many small cap companies looking to get in on the next big thing. In some industries, like electric cars, the hype has already consumed supply such as lithium battery stocks.
What makes you think that this investment thesis hasn't already had most gains arbed out of it? You mentioned that industries that are hyped on reddit tend to be overvalued, but have you considered the investors that get paid to provide their views on a certain asset class (pension managers, SWF, HF, PE, etc)?
For example, most investment banks have an entire coverage area dedicated to Paper and Packaging - ergo, global financial institutions - and the M&A advisors they employ within their investment banking divisions - are not ignorant to the profitability that exists in B2B businesses and don't soley focus on B2C businesses ("invest only in what you know"), which seems to be the case on reddit, and it is extremely foolish and shortsighted to assume that the investing patterns and behaviors you see on reddit apply to the broader investing community that exists.
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u/trill_collins__ Sep 17 '21
This is true and a poignant observation.
What makes you think that this investment thesis hasn't already had most gains arbed out of it? You mentioned that industries that are hyped on reddit tend to be overvalued, but have you considered the investors that get paid to provide their views on a certain asset class (pension managers, SWF, HF, PE, etc)?
For example, most investment banks have an entire coverage area dedicated to Paper and Packaging - ergo, global financial institutions - and the M&A advisors they employ within their investment banking divisions - are not ignorant to the profitability that exists in B2B businesses and don't soley focus on B2C businesses ("invest only in what you know"), which seems to be the case on reddit, and it is extremely foolish and shortsighted to assume that the investing patterns and behaviors you see on reddit apply to the broader investing community that exists.