Key insights
- The article highlights that an investment in Palantir (PLTR) over the past year would have resulted in a loss, contrasting with the significant gains in small-cap value stocks. It suggests that despite strong earnings reports from Palantir, investor enthusiasm (FOMO) led to buying at inflated prices, underscoring the importance of base rates and multiples in investment decisions. The author implies that market sentiment, particularly around trending sectors like semis, can lead investors to miss out on better-performing, less hyped assets.
You'd have $980 today. Much maligned and incredibly boring small cap value (VBR specifically) is up just over 20%, in comparison.
It seems that 90% of the posts on this sub over last couple months are about some sort of FOMO trade around semis, DRAM, whatever. A year ago, they were all about Palantir. And Palantir has posted some of the best earnings reports I've ever seen since, and might indeed be one of the best businesses in the world, but that was already priced in by the time FOMO investors jumped in.
Base rates matter, multiples matter, and always ask yourself what you know that the market doesn't.