According to Wikipedia, smoke and mirrors is a classic technique in magical illusions that make an entity appear to hover in empty space. More recently the phrase has entered common English use to refer to any proposal that, when examined closely, proves to be an illusion.
Investors should be cautious when approached with mind blowing projections, for some future period, without hard substantiation. For example, analysts and financial commentators have projected enormous profit potential for crypto assets, without a single specific metric to allow a potential investor to evaluate the opportunity.
Stock market investment advice typically is based on such generally accepted metrics as earnings and dividends. Investors should be careful when share prices appear to be influenced by charismatic management and/or herd mentality. In that vein, some of the hyperbole surrounding self driving and AI projections might seem to be disconnected from fundamentals and could fall under the general category of pie in the sky or “too good to be true.”
All comments and suggestions are welcome.
Walter J. Kirchberger CFA
