However, I reiterate that none of them will maximize profits, nor will any of them result in much nimbleness.
Could well be. In fact, this is my guess. In the absence of a megabubble and bust, I would be a little surprised, albeit happily, if there was a technique that allowed me to go in and out, lowering the risk of loss and increasing the return. My bet, though, is that outside of this megabubble/bust period, that one may well sacrifice more profit this way than one saves.
But, now we have the megabubble to consider. Because it was so dramatic, it is more likely that a tool could have gotten us out in a timely fashion. While I don't expect another megabubble any time soon, if I could find such a tool, I would be quite happy.
Point being, right now I have no real evidence whether any of these techniques is even a candidate.
A rock tied on ot the end of a stout stick is an improvement on a hand-held rock, but it still isn't an impact driver.
Yes, but it was a much more fundamental improvement in technology!
This isn't and won't be like engineering. That is about the first thing an engineer or scientist will notice. It is important to explicitly acknowledge that.
It may not be like engineering, but it is not unlike social and life sciences. Just because something has a lot of idiosyncratic or random behavior doesn't mean that one can't try to find ways to explain part of the variation and thus gain some predictive advantage. In fact, that is exactly what the Gorilla Game is all about -- find companies that have certain characteristics and they will display certain behaviors that are different from companies as a whole, behaviors that are advantageous to the investor.
All I am looking for is a way to put a bit of substance under some of the valuation ideas. FCF, for example, proposes a method that seems to make a certain amount of internal sense and it certain takes into account more issues than some simple method do. But, how does it really work in practice? Doing an analysis on a current company's position and telling me it is under or overvalued now is a testable proposition, but I have to wait five years to see how the test came out. I'm more impatient than that! |
