Low information voters (LIV) have become part of of our political lexicon, but the same concept could be used as an explanation on what drives asset markets. Those markets which have more LII (Low Information Investors) will have a higher likelihood of moving away from fair value and be less driven by the fundamentals. If you think about markets as a voting mechanism this analogy is apt. When we see markets move for reasons unrelated to fundamentals, we can confidently say they are driven by LII. This is just another way of saying "noise" traders which was the term used in the 1980's.
A good example would be the gold market which is often moved by ETF flows and not fundamentals. The low information investors who are driven by headline risk are another example where there can be a deviations from fundamentals by those who do not do their homework. LII can lead to market prices or results that seem out of touch with reality no different than the impact LIV some elections.
A good example would be the gold market which is often moved by ETF flows and not fundamentals. The low information investors who are driven by headline risk are another example where there can be a deviations from fundamentals by those who do not do their homework. LII can lead to market prices or results that seem out of touch with reality no different than the impact LIV some elections.
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