Watch this video where Ian Heslop, Wealth Manager and Economist at Old Mutual admits that analysing the fundamentals is impossible and pointless. All his colleagues get it wrong. The explains that Old Mutual will, therefore, no longer do it.
He points out other experts IBM CEO and even Albert Einstein got things wrong. He is a bit unfair on Michael Fish the weatherman who famously denied there was a storm on the way in 1987, a storm forecast by an amateur that he dismissed in his broadcast the night before the event. The storm in 1987 was the worst in recorded history and I still see the scars in the countryside where I live today. Ian says that Michael Fish is no longer a weather forecaster. That is true but he continued at the BBC for several decades until he retired. There is a point here: making this catastrophic forecast was not the end of his career. We instantly forgave him because we knew that what he was doing was actually impossible. But we demand forecasts and we wish people exist who can make them. Therefore we still have economists. We want to believe it is possible to reduce the influences to a simple story and we can understand it and see into the future. In our hearts we know there are too many influences on price and its impossible to know them all and weigh them up correctly. The only thing that does that – and does it perfectly is the price itself. The price knows all facts and, more importantly, what people think and expect of those facts. The only way to have a chance of making a forecast is to analyse the action of the all-knowing price.