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While the “expectations” vs plausibility value investing strategy proposed by Alfred Rappaport is eminently reasonable, its fatal flaw is timing (“Valuing stocks: why investors should look harder at expectations”, Opinion, September 29). In a world increasingly driven by the instant gratification of next-day delivery, on-demand streaming video and crypto tokens that can double your money in a matter of days, professional money managers do not have the luxury of waiting for price and value to converge.
A quarter or two of failing to keep up with the thundering herd will see client funds streaming out the door in search of quick profits and sure, easy money.
The upshot is that professional survival in the third decade of the 21st century demands that portfolio managers engage in momentum trading and index hugging, not the reasoned investment strategy of Professor Rappaport.
Chief Investment Officer, Army Capital
Chicago, IL, US