Contrary to popular belief, the market may be getting less efficient. The dominance of indexing, quant funds, and multi-manager pods—all with short time horizons—creates dislocations. This leaves opportunities for long-term investors to buy valuable assets that are neglected because their path to value creation is uncertain.

The erosion of trusted, centralized news sources by social media creates an information vacuum. This forces people into a state of 'conspiracy brain,' where they either distrust all information or create flawed connections between unverified data points.

Phenomena like bank runs or speculative bubbles are often rational responses to perceived common knowledge. People act not on an asset's fundamental value, but on their prediction of how others will act, who are in turn predicting others' actions. This creates self-fulfilling prophecies.

Extremist figures are not organic phenomena but are actively amplified by social media algorithms that prioritize incendiary content for engagement. This process elevates noxious ideas far beyond their natural reach, effectively manufacturing influence for profit and normalizing extremism.

The online world, particularly platforms like the former Twitter, is not a true reflection of the real world. A small percentage of users, many of whom are bots, generate the vast majority of content. This creates a distorted and often overly negative perception of public sentiment that does not represent the majority view.

The difficulty in going against conventional wisdom isn't just intellectual. According to David Rubenstein, it's rooted in the human desire to be liked and respected. People avoid contrarian bets because they don't want to be told they're "stupid" by their peers, making the psychological and social cost very high.

AQR's founder argues that markets are fundamentally "voting mechanisms" where price is a dollar-weighted average of opinions. Arbitrage is limited because correcting a mispricing becomes progressively riskier for less reward. Therefore, if a misguided belief is backed by enough capital, it can dominate and push prices away from fundamental value.

The modern internet economy runs on an "attention market" where viral narratives attract talent and capital, often independent of underlying business fundamentals. This accelerates innovation but risks misallocating resources toward fleeting trends, replacing traditional price signals with attention metrics as the driver for investment.

Before ChatGPT, humanity's "first contact" with rogue AI was social media. These simple, narrow AIs optimizing solely for engagement were powerful enough to degrade mental health and democracy. This "baby AI" serves as a stark warning for the societal impact of more advanced, general AI systems.