In his interview with Prof. Goodman, Prof. Laibson touches on behavioral economics and rational choice theory. Rational choice theory -- the idea that each individual decides what is most optimal for themselves via a cost-benefit analysis performed with the assumption of perfectly rational thinking -- has governed the field of economics since before its formalization as a discipline. It was only during the mid-20th Century when a different style of thinking, that which would eventually become behavioral economics, was first introduced. In reality, humans are bad at performing cost-benefit analyses and are creatures governed by emotion. Our "discount rate" is very high; we have a shocking preference for rewards now (see: Stanford Marshmallow Experiment), and a similarly astounding avoidance for discomfort in the present that will produce future rewards (see: empty gyms except around the New Year).
This relates to my predictive system as a DCF attempts to capture an unknowable truth -- the true value of an equity -- despite this equity being priced by a market that is made up of irrational humans. Ideally, this provides an inherent advantage, the model tells you when people are being irrationally bullish or bearish and you can respond accordingly. It does not, however, have any way of capturing how capriciously sentiment can swing from pole to pole in this regard. in addition, there's a school of thought that posits the market prices things rationally even though it is made up of irrational humans as the sum total of their irrationality nets to 0. Everything, assuming perfect information, should be priced to perfection.