The confidence vote is live now. Click here to vote

A brief history of fundamental analysis

It is very important for us to be mindful of the fact that fundamental analysis is predicated on having reliable information to work with. One might argue that the whole discipline of fundamental analysis is predicated on having factual information.

However, the ability to base your fundamental analysis on reliable information hasn’t been around for a very long time. Even more so, today in the cryptocurrency scene one could argue that this is still a very difficult thing.

Even 100 years ago, there wasn’t any reporting mechanism that required the people that were telling you ‘the fundamental value of their asset’ to actually tell you the truth. Prior to something like the Great Depression in the 1920s, most of the fundamental information that you were given were often very unreliable. In fact, most of the politicians heading into the great roaring 1920s with its bull market believed, as many other people, that if you were involved in the stock market and things went bad, it was your own fault. They saw the stock market as a speculative, gambling environment.

Even 100 years ago, there wasn’t any reporting mechanism that required the people that were telling you ‘the fundamental value of their asset’ to actually tell you the truth. Prior to something like the Great Depression in the 1920s, most of the fundamental information that you were given were often very unreliable. In fact, most of the politicians heading into the great roaring 1920s with its bull market believed, as many other people, that if you were involved in the stock market and things went bad, it was your own fault. They saw the stock market as a speculative, gambling environment.

Because people could now believe the information that they were given, coming out of the Second World War, whole industries of just processing reliable fundamental information were created. That industry blossomed with things like the Big Six accounting firms (the Big Four now). The analysis of fundamental information became extremely valuable in a very non-computerized world. Just imagine what it would take to analyze things like the S&P 500. And this is only the S&P 500! There are thousands of stocks in the US stock market! And that’s only the US! It was almost impossible, so whole armies of analysis teams were developed and that information became extremely valuable.

With the computerization of the world, a lot of these fundamental analysis procedures that were almost unheard of to be done by the public, can now be done almost by a click of the mouse. It’s staggering how much our world has changed! However, this does not change the fact that we still have to base our analysis on factual, reliable information. While we can base our analysis on a wealth of information, we have to make sure that this information is reliable and tells the true story. Especially in the industry of crypto investing, we have to be very critical of the information that we base our analysis on!

"