Some time back The Wall Street Journal had a piece on how some people are supplementing their income by starting a hot dog stand. The story reported that some people are making money by running these stands. The untold data in the story is the number of hot dog stands in those markets and the distribution of sales and profit for these stands. The danger is if others should see the success of a few and start their own stands.
Is it not pure luck that these early starters made any money at all from their stands? After all there is nothing unique about a hot dog and it is pretty much commoditized. However more will be tempted to start their hot dog stand because of the power of irrational positive thinking that make people underestimate risk and overestimate success. People choose to look only at the few who succeeded and overlook many who failed, and convince themselves that they will be in the former group.
Irrational positive thinking is not isolated and it is not dependent on demographics. Ease of availability of cheap technology has brought out the digital hot dog vendors in all of us. Just like the real hot dog, these digital ones are indifferentiable from one another and compete in a market that has no barriers to entry.
Of course, someone making money from this frenzy are the hot dog stand makers, and those who want you and I to be the next big time “hot dog stand” owners. If there is really money to be made from these “hot dog stands” why are these book authors not investing all their resources in it?