June 26, 2019

The world is full of obvious things which nobody ever observes

Uninfluential people whose aggregate actions are enormously influential. 

If you manage a $50 billion hedge fund you will be called a market maven and your investment actions will be viewed with rapt attention when analyzed on CNBC. If you are unassuming Steve from Boeing’s accounts receivable department who invests in a $401(k) plan, no one will pay any attention to you, because poor Steve has no investing influence. But Boeing’s 401(k) plan manages $51 billion, made up almost entirely of people like Steve from accounts receivable. They self-direct their investments, both the allocation and the timing of that allocation. That gives them more trading influence than the $50 billion hedge fund manager, whose supposed influence stems from the ease of focusing on one well-dressed person rather than 85,000 Steves.

It is obvious that an army of Steves has more direct investing influence than any single fund manager. But they escape your attention because Steve by himself makes no difference.

The same is true in elections, consumer spending, and cultural trends: It is easy to underestimate the collective influence of tons of otherwise uninfluential people.

This is partly why the market has performed so well while so many macro investors predicted doom.

Read more at https://www.collaborativefund.com/blog/obvious-things-that-easily-escape-attention/

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