deaddog wrote:If you know the value of the company ...
When I was younger and still very foolish, I bought and read Aswath Damodaran's Investment Valuation (2nd ed), all 959 pages of it. While there was a lot of good stuff there, at bottom, value is the net present value of future cash flows, so you have to forecast future revenues, expenses, and so on. But how do you do that? Again, Damodaran has some discussion, but the underlying approach seems to be to extrapolate past trends, adjusting for a few financial parameters such as debt ratios and retained earnings and such.
That struck me at the time as highly dangerous. (I work mostly in telecom, where past trends are worth squat.) I'm not sure if that is what is meant by "fundamental analysis", but if it is, a chimp throwing darts seems about as useful.
And if you interpret "fundamental analysis" as going out and surveying future market size, and your company's share of that future market given existing competitors and new entrants, and the likely prices that will result, and the operating expenses required to produce that revenue, and capital expenditures to achieve sufficient capacity -- if you estimate all of that for the next ten years -- then you and the company's CFO (and maybe Warren Buffett) are the only ones that will have done it. Which means that you will be in possession of an important piece of information which, unfortunately will be of no use to you as an individual investor -- since nobody else will know it or, more importantly, act upon it.
But some find the spread sheets pretty.
The plural of anecdote is NOT data.