Prediction is not a strategy
Markets are overvalued, many analysts say. But what does that actually mean? Understanding what doesn't work is often the first step toward clarity.
We place little value on fundamental analysis. Much of the investment industry does. Sometimes out of conviction. Often out of commercial necessity. Our view is different. It’s shaped by years of experience and ongoing insight, not quick opinions.
Take the idea of ‘undervaluation’. It’s often expressed through metrics like the price-to-earnings ratio. The price is a fact. The earnings? That’s a forecast. And forecasts are made by analysts, influenced by interests, and frequently revised. Calling a stock ‘undervalued’ creates trades. And trades generate commissions. Healthy scepticism is wise.
Especially now, with historically high valuations, it may seem like there’s hidden value beneath the surface. But that assumption often rests on fragile estimates. Earnings forecasts are interpretations of a future no one knows. Often they are simply an extension of the recent trend. Even management teams rarely manage to give reliable guidance. That says enough.
The world is too complex to predict reliably. Macroeconomic shifts, geopolitics, competition. Small changes can have major impact. And those effects are often priced in before analysts adjust their models.
Calm arises when you recognise that. When you choose a method that doesn’t rely on forecasts, but adapts to what markets actually do.
That is the core of our approach: risk-adaptive and trend-following. Based on facts — not expectations.
Curious why this works, especially in today’s unpredictable markets?
