A Distracted Walk with Fundamental Analysis

In this post I’ll go into some detail about what assumption we need to reality check for fundamental analysis to work in the context of efficient-market hypothesis and random walks. In simple terms it’s the current value of an asset represented by summing all future cash flows, with any future cash discounted according to some discount rate. It should be clear from the above that we should be allowed to assume there are delays in the view of what intrinsic value investors will put on an asset.

Source: portfolio.construction