In 2013 upon the public disclosure of a significant position in Apple shares by Carl Icahn I published an article wondering if Carl was having a Bill Ackman moment by becoming involved in what I thought was at that time and continue to believe is a value trap.
Turns out it was not exactly a Bill Ackman moment as Mr. Icahn managed a decent return overall. However, for those hapless souls who decided to follow Mr. Icahn into the AAPL trade believing that if his money is invested then their capital will somehow be blessed, the end result was not that great.
One of the most dangerous trades on Wall Street has been and will always be following the hot fund manager of the moment into his favorite investment. Typically these types of scenarios end up with that popular manager suffering from reversion to the mean syndrome right when his popularity achieves critical mass. This in turn results in the manager losing money or not doing as well as investors thought, creating resentment upon the salivating herd as they had no doubt that this investment would pay for a pair of jet skis and a fishing trip to Montana.
In the meantime, the very same investors who thought they were getting value in Apple were missing out on "expensive" names such as Facebook (a stock I was talking about being at $100 in 2013), Tesla, Amazon and Google, resulting in tremendous opportunity cost all the way around since 2013.
In the end it turns out that being an investor who simply follows your favorite fund manager of the moment into investments is no different then being locked in a small dark room. You have no idea where you are going, what is next, or when you will be out.
