From Bill Miller at Miller Value Partners: The most important question in markets is always what is discounted? What does the market expect, as reflected in prices, and how do my expectations differ? All expectations incorporate a time horizon, and that has to be reflected in one’s judgments. Today those time horizons appear to be quite short, creating a just-in-time market, or a data-point-driven market, one that extrapolates each new number as if it were the start of a new trend. The markets have become more informationally efficient, quickly incorporating new information into prices so fast that one has almost no ability to effectively trade in response to what comes over the tape. By the time one has been able to read a company’s earnings release, the "wisdom of crowds" has usually adjusted the price to reflect whatever new information is contained therein, and those changes are usually pretty good, at least in the short run. Adding value involves forecasting changes in what Joh...
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