If I can summarize your question as something like “can I beat the returns on an index fund by only investing in companies with new/useful technologies”, I think you’ll find this question is similar to “which version of the EMH is true”, and you’ll also find a lot of good discussions about this, for example here: https://www.themoneyillusion.com/are-there-any-good-arguments-against-the-emh
For the two stories presented, I would say Story 1 is trivially true and Story 2 is probably false, although it’s not phrased super well (for example, is “advances in technology” company specific or general economic growth?). Trying to read between the lines, it seems like you’re wondering something like “if my choice to invest is between two companies, and Company 1 has current cash flow of $1-million and future cash flow of $1-million (no growth), and Company 2 has current cash flow of zero but future cash flow of $1-trillion (lots of growth), should I always invest in Company 2?” And my answer is “no, unless you think weak EMH is true and there’s a specific inefficiency that you can uncover through your research” ( and even then, your research might determine you should sell rather than buy Company 2).
To improve the framework, I suggest the following distinctions/assumptions:
Some form of EMH (weak, semi strong, strong) is true (I tend to agree with Sumner that anti-EMH models are not useful).
There’s a positive link/correlation between stock price and stock value in the long term. (In the short term price and value might diverge.)
Real vs Nominal: Real value/price is determined by things like goods produced, services provided, technology/productivity growth. Nominal value/price is determined by the above but also the supply and demand of money, inflation, exchange rates. I recommend Sumner for discussions on this distinction, he blogs at Econlog and TheMoneyIllusion.
Also, note that “technology” has a non-colloquial meaning under most economic models. For example, the Solow-Swan growth model says something like long term growth is determined by growth in the labor force and growth in “technology”, where “technology” is basically anything that’s not labor force and includes things like human capital/knowledge accumulation/diffusion and social/political institutions.
Using this framework, you could change your question to something like “assuming weak EMH is true, what sorts of public information about a company’s new/useful technologies would allow me to value a company more accurately than the average investor”. Then you could search for studies that try to answer this question or something similar.
If I can summarize your question as something like “can I beat the returns on an index fund by only investing in companies with new/useful technologies”, I think you’ll find this question is similar to “which version of the EMH is true”, and you’ll also find a lot of good discussions about this, for example here: https://www.themoneyillusion.com/are-there-any-good-arguments-against-the-emh
For the two stories presented, I would say Story 1 is trivially true and Story 2 is probably false, although it’s not phrased super well (for example, is “advances in technology” company specific or general economic growth?). Trying to read between the lines, it seems like you’re wondering something like “if my choice to invest is between two companies, and Company 1 has current cash flow of $1-million and future cash flow of $1-million (no growth), and Company 2 has current cash flow of zero but future cash flow of $1-trillion (lots of growth), should I always invest in Company 2?” And my answer is “no, unless you think weak EMH is true and there’s a specific inefficiency that you can uncover through your research” ( and even then, your research might determine you should sell rather than buy Company 2).
To improve the framework, I suggest the following distinctions/assumptions:
Some form of EMH (weak, semi strong, strong) is true (I tend to agree with Sumner that anti-EMH models are not useful).
Value vs Price: Value is determined by things like future cash flows, risks, discounts and opportunity costs. Price is determined by supply and demand. I recommend Damodaran for discussions on this distinction, for example http://aswathdamodaran.blogspot.com/2020/03/a-viral-market-meltdown-iii-pricing-or.html
There’s a positive link/correlation between stock price and stock value in the long term. (In the short term price and value might diverge.)
Real vs Nominal: Real value/price is determined by things like goods produced, services provided, technology/productivity growth. Nominal value/price is determined by the above but also the supply and demand of money, inflation, exchange rates. I recommend Sumner for discussions on this distinction, he blogs at Econlog and TheMoneyIllusion.
Also, note that “technology” has a non-colloquial meaning under most economic models. For example, the Solow-Swan growth model says something like long term growth is determined by growth in the labor force and growth in “technology”, where “technology” is basically anything that’s not labor force and includes things like human capital/knowledge accumulation/diffusion and social/political institutions.
Using this framework, you could change your question to something like “assuming weak EMH is true, what sorts of public information about a company’s new/useful technologies would allow me to value a company more accurately than the average investor”. Then you could search for studies that try to answer this question or something similar.