What is expected value (EV)?
Expected value is what a bet earns on average, if you could take it many times: the chance of winning times what you'd win, minus the chance of losing times what you'd lose, minus fees. A bet with positive EV makes money over the long run even though any single one can lose. Your fund only takes positive-EV bets.
The arithmetic, on one bet
Say your CEO's research puts an outcome at 68% while the market charges 61¢ per share. Sixty-eight times out of a hundred the share pays $1 (+39¢); thirty-two times it pays $0 (−61¢). Average: 68% × 39¢ − 32% × 61¢ ≈ +7¢ per share Before fees, which the fund subtracts before deciding anything.
Why single results don't judge the bet
A +7¢ EV bet still loses roughly a third of the time, and losing it doesn't make it a mistake, just as winning a −EV bet doesn't make it smart. EV separates decision quality from outcome luck, which is exactly how the cycle reports grade your fund: on the prices it paid, not on any one night's bounce.
The discipline it enforces
EV is edge turned into a number, and the number draws a hard line: positive after fees, or pass. Over a season, a fund that only crosses that line lets the law of large numbers do the compounding, which is far less thrilling than a hunch, and far more durable.