An Alternative Approach to Fundamental Analysis: The Asset Side of the Equation

Journal of Portfolio Management, 17(1991) pp. 6-16; https://jpm.pm-research.com/content/17/2/6

Posted: 6 Nov 2020

Date Written: August 1, 1990

Abstract

A standard approach for determining the fundamental value of financial claims is to compute the discounted value of the expected dividend stream. This paper discusses an alternative approach that estimates fundamental value as the discounted value of the cash flows expected from underlying real assets. Illustrative empirical estimates indicate that the ratio of market to fundamental value varies over time and across industries.

Downloadable document available at: https://jpm.pm-research.com/content/17/2/6

Keywords: fundamental value, intrinsic value, effects of tax policy, value investing, overvalue ratio

JEL Classification: G00, G11, H21

Suggested Citation

Downs, Thomas W., An Alternative Approach to Fundamental Analysis: The Asset Side of the Equation (August 1, 1990). Journal of Portfolio Management, 17(1991) pp. 6-16; https://jpm.pm-research.com/content/17/2/6, Available at SSRN: https://ssrn.com/abstract=3694283

Thomas W. Downs (Contact Author)

University of Alabama ( email )

P.O. Box 870244
Tuscaloosa, AL 35487
United States
205-348-7842 (Phone)

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