Relative price prediction is an inherent part of valuation. You predict what the price of, say, a bond is given the price of the discount rate over the life of that bond. You are not predicting the absolute price of the bond, you are not able to predict if rates are going to go up or down. That's the appeal of arbitrage, you don't need to see the future, you make money no matter what if you see that a particular asset is 'out of whack', mis-priced, cheap, expensive, and you buy/sell it (and execute the appropriate arbitrage hedging strategy until maturity of the trade).

>But isn't prediction an inherent part of valuation?

Doesn't need to be. You have wealth you have to store somehwere because it is not being spent now. Can store it as equities, debt (including a bank account), Paper cash money under the mattress, gold bars, BTC, etc etc.

Let's say you have the list of potential places to store it and can get a price/value ratio but with a common term of "X" in the value

  - A = 3.1/X
  - B = 2.8/X
  - C = 1.9/X
  - D = 4.2/X

Gotta put it somewhere if you aren't spending it. In the above you'd Choose "C". Lowest price to value ratio even though you don't know what the actual value is.

Yes, this is a massive simplification as it ignores diversification benefits and so on but there's the basics of the usefulness of valuation where you don't and can't know the value.

"prediction of the market" here means "Do you think the S&P500 is going up or down this year?" Warren Buffet completely ignores this, takes no view on it. Timing the market is very hard. Assuming the market will reflect the economy and the economy will grow because people work hard, are smart, we invent new things and population increases, then picking the best of what's available is the normal value investors route, a la Buffet as the most famous practioner.

Burton Malkiel's "A Random Walk Down Wall St." is still, IMHO the best summary of all the theory and practise of investing - excluding the quant funds like Renaissance. Maybe he has an update for them? Maybe it's also worth reading if it exists or maybe not. Don't know.

No idea if renaissance time the market or what.

edit: punctuation and the Malkiel recommendation.

This is highly dependent on the model in question. If you look at the parameters of the Black-Merton-Scholes model, there are assumptions embedded in the model that aren't necessarily predictions.