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6 minutes to read by  RBC Global Equity team, J.Richardson Sep 2, 2025

Jeremy Richardson, Senior Portfolio Manager for Global Equities, discusses how the growing significance of ‘technical’ trading weakens the connection between share prices and company fundamentals, amplifying mispricing opportunities.

Key takeaways:

  • Divergent expectations of individual market participants create multiple perceptions of fundamental value. Public market share prices record the outcome of a negotiation between unknown buyers and sellers based upon their own inputs. This makes share prices an imperfect valuation tool but is nevertheless the least worst of those available.

  • Increasing market sophistication is eroding the link between expectation-driven share prices based upon company fundamentals and replacing it with technical driven trading. Unanchored by fundamentals, share prices are free to diverge, increasing market mis-pricings.

  • This creates volatility, testing the mettle of active investors. But more technical-led mis-pricing also means more opportunity for the active investor, opportunity that a passive approach won’t be able to access.

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