Category Markets

Equities value potential over proof

Equity markets serve as aggregators of collective investor expectations about future developments, reinforcing that potential is the central determinant of stock valuations rather than proof. Stock prices are predominantly forward-looking, embedding investors’ forecasts regarding future earnings, growth opportunities, competitive positioning,…

Demand and expectations

The financial market is driven more by expectations of future demand than by past fundamentals. It is an emotional theatre where stories, narratives, and psychology dictate direction far beyond the underlying fundamentals.

Gravitating towards the rational outcomes

Markets and securities are often overbought or oversold, and they can maintain or extend those conditions for a long time. The outcomes that are more likely to happen may not happen until long after they first became likely. Markets can…