Financial Theory   Human Aspects Financial Markets The value of any asset is equivalent to its discounted future cash flows.   Markets are driven by Institutional incentives & imperatives Fear and greed, mass psychology Short-termism Businesses The earnings potential of a business is determined by its sustainable competitive advantage.   Managers have Different skills Different characters Different goals Investors Active investing with outstanding brains and a defined process will generate Alpha.   Investors are hampered by a plethora of mental limitations and biases.