Interesting article at The Reformed Broker looking at the current state of finance markets where money is essentially free and a company’s style is more important than its substance - image is valued more than assets.

There are no asset managers who represent their strategy to clients as “We buy the most expensive assets, and add to them as they rise in price and valuation.” That’s unfortunate, because this is the only strategy that could have possibly enabled an asset manager to outperform in the modern era. It’s one of those things you could never advertise, but had you done it, you’d have beaten everyone over the ten-year period since the market’s generational low.

But almost every investment professional says that they do the opposite of this. Even the explicitly growth-oriented managers use terms like “at a reasonable price,” to communicate their place on the spectrum of speculative chastity. There are no textbooks lauding an investment approach where it makes more sense to buy PayPal at 4 times book on its way to 9 times book while forsaking Goldman Sachs at less than 1 times book.

Some of this is no doubt down to network effects - AirBNB’s product can be rolled out in a new market for a negligible cost compared to a major hotel chain moving in to a new territory - but you still wonder if this is some sort of repeat of the Dot Com boom where most tech companies were massively overvalued based on hype.

I’ve had a similar discussion with a friend of mine regarding buying property. We both took the rational approach of not buying for a long time as the market was severely overpriced, and, in my case, when I did buy I bought something I could afford to repay even if rates went up a few percent. In this age of free money, that was completely the wrong strategy. The correct one was to borrow as much money as the bank would give me, get an interest only mortgage to lower repayments and just get rich off the capital appreciation without repaying any of the principal. Is this a temporary aberration, or the new normal?