Fundamental analysis alone is insufficient for crash prediction from "summary" of Why Stock Markets Crash by Didier Sornette
Fundamental analysis, which focuses on the intrinsic value of a stock or market, is a valuable tool for investors to assess the health and potential of an asset. It examines factors such as company earnings, revenue growth, and macroeconomic indicators to determine whether a stock is undervalued or overvalued. While fundamental analysis can provide useful insights into the long-term prospects of an asset, it is not always sufficient for predicting crashes in the financial markets.
One of the limitations of fundamental analysis is its reliance on historical data and assumptions about future performance. Market crashes are often the result of unforeseeable events, such as geopolitical crises, natural disasters, or sudden shifts in investor sentiment. These external factors can have a significant impact on asset prices, causing them to deviate from their intrinsic value and leading to a crash. Fundamental analysis may not fully account for the unpredictable nature of these events, making it challenging to predict market crashes solely based on th...
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