It's a little less black and white. Suppose I put a guy with a physics PhD in a dark room for a while and he tells me 'with 99% probability, a stock with a price-to-earnings ratio of under 10 will beat the S&P 500 the next year". So whenever a stock's ratio gets below 10, I buy the stock and short the S&P 500 and wait for the bags of money to arrive. In that case, I'm not really relying on noticing the actions of others who have discovered a good deal. Yet, I am keenly interested in beating anyone to the stock when the ratio gets to 9.99. In reality, the market signals are more complicated statistical relationships, they could just as easily arise from someone being very dumb, instead of very smart. Or just the result of random variation that day.