Proper Investment Analysis Framework

Analyzing a topic requires a rigorous framework

Jim Rickards Analysis Framework

  • Use data and science to make a prediction that can later be validated
  • Propose potential outcomes and their probabilities (alternate scenarios)
  • Set a context and prediction timeline
  • Validate your prediction or adjust a prediction over time with verification and future data

  • Missing a forecast is ok if you provide good reasons why the initial forecast was wrong.  Also important to use the learning to update future predictions

Financial Analysis Traps

  • Some financial forecasters make the same prediction year over year.  Eventually they are right - and they build their careers around that.  This is not very helpful during the majority of time when they are wrong