The Truth About Fundamental Analysis And Equities
You Can Not Use The Objective Past To Predict A Subjective Future
By: Christopher Roman
Many people ask me about investing and how it is connected to fundamental analysis. This is how I view fundamental analysis, in general.
You can not use the objective past to predict a subjective future
To most investors, fundamental analysis is warm and comforting to people that have their life savings tied to equities or stocks. The truth is, most institutional investors almost never keep open interest in the markets after they close. Meaning, they never keep open risk in the markets at the end of the day.
(But) Why?
There is no fundamental analysis that can predict a pandemic. There is no algorithmic system that can predict whether or not the Deepwater Horizon is going to explode. Just as there is no IT system that is going to predict whether or not the Exxon Valdez will run aground on Bligh Reef. Or the sudden and ignominious failure of…
