Forecasts are not foolproof

Novo Nordisk’s share price dropped after it lowered its 2025 profit forecast. Investors had priced in overly optimistic expectations for Ozempic’s future growth, with the stock collapsing when projections were reduced. Forecasting is difficult, and when expectations are high, small disappointments can trigger big losses. Of the ten largest companies in 2000, only Microsoft and Oracle have outperformed the S&P 500 since, with four earning less in 2024 than they did years ago. Despite high valuations at the time, investors underestimated their long-term underperformance. The future is unpredictable,...