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“Fundamental analysis” is not merely a narrative, though. For example for a mature company, there is an underlying economic reality about the time frame you can
by ibeckermayer 5y ago
“Fundamental analysis” is not merely a narrative, though. For example for a mature company, there is an underlying economic reality about the time frame you can expect to earn back your initial investment in dividends, and the subsequent ROI.
- meowkit 5y agoAt the end of the day its a model and all models are fallible because they cannot perfectly capture reality. Fundamentals is a narrative that assumes a lot of things like the stability and idealization of a businesses operating environment. These are just baked into the narrative in such a way that they seem “objective” and a part of the “economic reality”. Yuval Harari’s Sapiens and Taleb’s Black Swan make really compelling narratives that everything is a narrative.
- anotherlost1 5y agoWhat would a compelling narrative that everything isn't narrative look like?
- sudosysgen 5y agoFinancial post-post-modernism? Interesting, perhaps something like Micheal Hudson's take, but I don't how to apply it to valuation of stocks.
- deleted 5y ago[deleted]
- ivalm 5y agoMature companies that do not pay back dividend or buy back shares also exist and are still valuable (eg amazon).
- Animats 5y agoAt some point, they stop growing, and will be expected to pay a dividend. Apple and Microsoft pay dividends. Failure to pay a dividend is seen only in companies where the founders have a stock scheme which keeps them from being out-voted.