In writing investment strategy each week, I have to remind myself to be bold and make “forecasts”, not “back casts” or “present casts”.
The “present” is extremely efficiently priced in, due to high frequency trading, advances in telecommunications, real time information to investors and financial TV networks that call markets like sports broadcasts. However, the future is highly inefficiently priced and the “time arbitrage” in markets remains large and exploitable.
The future is not now
Quite interestingly over the last few months as I have banged the “be cautious in yield equities in Aussie dollars” drum, I have had numerous responses about “interest rates still being very low” and yield equities currently looking attractive versus cash. That is absolutely right today, as it was a month ago, but what I am trying to do is forecast what the screens in front of us say in six to 12 months’ time.