Proper Investment Analysis 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
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• 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