pull down to refresh

The next edition of bitcoinizing the world without using the word "bitcoin", denlillaapan style.
In a sly, roundabout way what I'm trying to do in this article is "debunking" fundamental analysis (#836811) —and sort of probe "no intrinsic value" type people to accept that maybe, just maaaybe heretic ideas like bitcoin might be worth looking at.
I learned stock analysis and financial accounting from an online nym called “Lundaluppen.” It was the early 2010s, blogging was all the rage, interest rates were crashing toward zero, and the central bank-fueled stock market was turning into the only game in town.
Only over time did I learn that his approach was called “fundamental analysis” and that it stemmed, via Warren Buffett, from an early-to-mid-20th century investor by the name of Benjamin Graham. Graham’s book, The Intelligent Investor, first written in 1949 and published in updated editions, contained everything a securities analyst would want, from how to read an annual report and assess the value of a business to create (and follow!) disciplined investment steps for oneself.
Also snuck in a nice SN link here (hashtag gimme-gimme-gimme those sweeet referral rewards!):
But I keep getting the sense that none of this really matters anymore. We’re in a new world now, dominated not by company performance or earnings projections, but macro news and liquidity flows. An ever-faster rising money tide raises all boats, with assets’ monetary premium running the show much more than which company is cash flow positive or whose stock trades at below working capital. (Screening for such criteria today, notes Zweig, produces a string of biotech and hopeful pharma companies, neither recommend themselves for investment to his average reader.)
I run through Jason Zweig's excellent new edition of Graham's classic book, only to set up the kicker:

"for all the talk about the importance of strict investment analysis over the years, it’s setting them aside for those generational investments (and letting those run) that truly made these individual investors rich."

...and yes, @Undisciplined, this post (plus its predecessor two weeks back, #836811) is why SN works so great for me as a writer:
  • spread my writing further/into other channels that might not monitor TDE as much as I do;
  • provide extra commentary that either didn't make it into the piece or was "my mentality when writing";
  • get some sweet extra sats in the process (THANK YOU KINDLY, STACKERS! lots of love)
That's it. Lemme know what you think, Stackers!
Fundamental analysis doesn't work when passive investing and liquidity is what moves markets. I don't like it but it is what it is.
I do think a Bitcoin standard could make fundamental analysis and buying companies at a discount great again.
reply
The idea with FA is you are analyzing companies, not markets or market moves. It is kind of the point.
reply
My argument is it is irrelevant when passive and liquidity is what drives the bus. Deep value has massively underperformed for over two decades.
reply
I get your argument and it is statistically not wrong. I'm saying it won't help you if you're analyzing a company that is not listed.
reply
I'm not so sure about that. They're not hermetically sealed off, two separate systems. Private equity gets spillovers from public equity (particularly venture cap or bond financing), so prices there too get distorted by the money.
So no, I'm leaning that this objection probably doesn't hold.
reply
Are you saying people don't need to have the ability to perform financial analysis on a small chain of plumbing businesses because why again? Perhaps a degree in Finance won't let me see your arguments.
If you're not analyzing cash flows what are you even doing? 🤣
reply
No, I'm saying they have the same problem as public markets.
Graham's criteria or approach won't work in stock market anymore (if they ever did) precisely because of monetary premium and the liquidity flows getting things out of wack.
Via VC and private equity investing, that money spills over into the plumbing business etc as well.
Everything tainted.
reply
This is true. But I find one has to constantly adapt - looking for the missed, local opportunity.
Oh for private companies fundamental analysis is still highly relevant. Absolutely.
reply
Important distinction!
reply
Generally my take as well. Glad I'm not shouting at clouds, losing my mind over here ;)
reply
get some sweet extra sats in the process (THANK YOU KINDLY, STACKERS! lots of love)
You are welcome! Always interesting to read your thoughts!
reply
SN is the outlet u never knew u neexed
reply
17 sats \ 2 replies \ @Ge 17 Jan
to basically sum up this book in bitcoin just stack sats and chill
reply
Roughly, yeah
reply
0 sats \ 0 replies \ @nym 17 Jan
Thanks for the TLDR.
reply