Fundamental Problem

In violent times
You shouldn't have to sell your soul
In black and white
They really really ought to know
--Tears for Fears

When's the last time a MV prof employed the 4 Primary Metrics (i.e., fundamentals, technicals, psychology, structural) to assess markets and determined that the fundies were the primary factor? Perhaps it's occured since the 'Ville opened in late 2002, but I read every word scribed by the professorship and I don't recall such a thing.

My sense is that the structural dynamic has driven the market's dominant logic away from investing and towards trading--a move that has reduced the importance of fundamental analysis in decision-making processes.

Paraphrasing one sharp cookie's observation, the market's current collective mindset knows the price of everything but the value of nothing.

I think this will change. If/when we experience a general deflation, asset prices will likely sink and folks may once again seek skill in fundamental analysis. If trading loses its lustre, then market participants may once again focus on fundamental factors driving a business like General Electric (GE), and what the cash generating capacity of a potential investment in GE is worth relative to its current price (a.k.a. valuation).

More on this to come, as I would like to expand MV content on fundamental analysis particuarly as it relates to valuation.