This weekend the annual Eurovision contest took place, with one singer/group from various European (in a broad sense) countries competing. Italy won, followed by France and then Switzerland third. For those who don’t follow it (and I have to admin this was the first time for me) the Eurovision final scoring works with a combination of national jury votes and televote. Let’s put it this way: the national jury is the “institutional” vote, and the televote is the “retail/popular” vote. First runs the national jury vote. At the end of the national jury votes, Switzerland was 1st, followed by France, Malta and Italy was only 4th. Great excitement on the Swiss and Malta side, some disappointment on the Italian front. Then the televote results came in, starting from the bottom.
The showdown
First big surprise shaking the audience and the participants: the finnish band Blind Channel, who scored relatively weakly on the “institutional” rating (83 points), received 218 points from the “crowd”, from the people, and temporarily jumped to the first place.
Then another big surprise: Ukraine scored big with the people, and surpassed Finland, adding fat 267 points to the pretty low 97 points obtained from the national juries.
Italy then got over 300 points from the public, got catapulted to 1st place, and was never surpassed. Malta, who was 3rd in the institutional round, scored very weakly with the public and ended up only 7th, behind Finland.
The idea
Why the hell am I writing this? Because it struck me as a good lesson, a good reminder: ranking assets rationally, according to well-studied criteria (in a way the theoretical equivalent of the national juries that are supposed to be more technical) is very important, and many institutional players may agree on what is a good investment, a bad one, an overpriced or an underpriced one. But in a market where a big chunk of the players may value things in a different way, maybe irrationally from a fundamental valuation point of view, during times of “irrational exuberance”, the term popularised by Alan Greenspan, things may end up quite differently.
While one should not necessarily always follow the crowd, ignoring or going against the crowd may be very costly, at least temporarily, in addition to being psychologically very challenging and requiring a certain predisposition and/or training.
The question
We can ask ourselves: do I have a tendency to be systematically on one side, for example contrarian or fundamental, instead of trend-following or other? And depending on the answer: am I properly equipped, especially psychologically, to operate with this approach?