The Rational Reminder Podcast · Thursday, October 1, 2026
Victor Haghani explained his model, which includes three investor types: value investors, static investors (like those with strategic asset allocations), and extrapolators (return chasers). He argued that extrapolators, who base decisions on recent returns, and static investors, who rebalance to target allocations, exacerbate market volatility and create momentum, contradicting the idea of a purely rational, long-term value investor dominating the market.
“But then we add two other types that are very prevalent in the marketplace. One of them, there can be no doubt of whatsoever. It's a static investor. We know that so many investors out there have a static strategic asset allocation, maybe 60% equities, 40% fixed income or 70-30 or endowments have these pretty strategic asset allocations.”
“But then really the critical key factors investor type that we believe is generating so much of the perceived market anomalies is the extrapolative investor, the return chaser.”
“The extrapolators are creating momentum in the price series. They're also creating this excess volatility.”