Comment by kqr
16 hours ago
Fundamental analysis is great! But I have trouble answering concrete questions of probability with it.
How do you use fundamental analysis to assign a probability to Nvidia closing under $100 this year, and what probability do you assign to that outcome?
I'd love to hear your reasoning around specifics to get better at it.
I think the idea of fundamental analysis that you focus on return on equity and see if that valuation is appreciably more than the current price (as opposed to assigning a probability)
Don't you need a model for how people will react to the fundamentals? People set the price.
Possibly? I don't know -- hence the question!
GP was presenting fundamental analysis as an alternative to the article's method for answering the question, but then never answered the question.
This is a confusion I have around fundamental analysis. Some people appear to do it very well (Buffett?) but most of its proponents only use it to ramble about possibilities without making any forecasts speciic enough to be verifiable.
I'm curious about that gap.