Verdad Advisors argues that investors systematically overestimate their ability to predict the future, creating opportunities in volatile, deeply unpopular companies. Drawing on psychology, private equity data, and market history, the piece claims quantitative rules beat expert judgment, especially when uncertainty and leverage amplify mispricing.
Betting on Unpredictability
Verdad
Research
6 Pages
Key Takeaways
Expert Forecasting Failure: Philip Tetlock’s 20 year study covering 82,361 predictions found random 33% probability assignments outperformed political and economic experts.
Cheap Deals Dominated: Bain Capital research on 2,500 deals showed transactions below 7x EBITDA generated 60% of profits, while the most expensive 50% produced only 10%.
Volatility As Edge: Verdad cites 17% annualized returns since 2012 by targeting leveraged small caps, compared with private equity’s 13% annual returns versus 8% for the S&P 500.
Join our newsletter to have all of this content + Exclusive Newsletter Bonus Content delivered to your inbox every week
Related Content
