It's not even that. Imagine you were an investor: you'd invest in stupid things knowing that "investors aren't really smart." Other savvy investors would understand you're investing in slop, too, and follow suit.

You have a system in which investors are usually smart, but betting on collective stupidity.

Same with, say, the Chinese real estate market, where they were building apartments that no one could live in. Everyone is intelligent enough to know they were useless buildings, but you can still make money speculating on the bubble.