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> Suppose we did have an AI model that could with near certainty predict both the future cash flows of a company and future interest rates. You could very easil
by melvinmelih 3y ago
> Suppose we did have an AI model that could with near certainty predict both the future cash flows of a company and future interest rates. You could very easily calculate the discounted cash flow and determine the fair share price today or at any point in the future.
The thing about trading is that, ultimately, prices are not determined by information, but how the hive mind interprets that information. And in practice, that is not always a 1:1 relationship (see the meme stock hypes). As Keynes* famously said: the markets can stay irrational longer than you can stay solvent, is exactly the reason why even having access to perfect information will not make you necessarily successful.
- jandrewrogers 3y ago> As Buffett famously said: the markets can stay irrational longer than you can stay solvent Buffett did not say this. It is widely attributed to the economist John Maynard Keynes almost a century ago but there is no evidence that Keynes ever said it. I believe the current hypothesis is that it originated with a well-known economist in the 1980s.
- waveBidder 3y agoit's a Keynes quote, but yeah.
- melvinmelih 3y agoMy bad, corrected!