Fundamentalist perspectives

In this blog we have discussed the use of key performance indicators a lot. These are numbers that can be used to monitor progress towards predetermined goals - and they can be very useful if selected wisely. They do, however, give a shallow view of the situation, but have the advantage of giving a quick overview of the state of affairs. Sometimes, however, a deeper look at things is certainly justified.

It is from this point of view I am thinking of fundamentalist perspectives; these are terms used to describe stock brokers. A fundamentalist among stock brokers is not likely to support a large black beard and be carrying sables around. He us much more likely to be wearing something from Gucci and talk about taking the fundamentals into account when valuing stocks. With fundamentals we understand such things as financial standing of the company to be traded, general market conditions, the weather, season, the company's manager's ability to implement change and so on... On the other hand, there are other stock brokers, the socalled technical analysts. They try to value stocks and predict the future by looking at how the stock value and some other KPI's have moved in the past. Both of these groups tend to think that the market is not efficient on the short term. The fundamentalist typically thinks the market is efficient in the long run, whereas the technical analyst will tend to explain the market from past trends and mention behavorial finance and the like. We'll save more on this for later.

I think that both these types are fundamentally wrong - but both types of analysis can be useful. In our assessment of general progress we should sometimes move from the technical analysis kind of thinking to thinking in terms of fundamentals - how have my actions effected the important things for me? Am I feeling more happy now, or are the KPI's fooling me to believe I am making progress when I am not? If the KPI's are astray when you start considering fundamentals - you need to select new KPI's that are better aligned with your true goals. One should perform a fundamental walk-through now and then on all projects one is working on, to make sure everything is allright. And, of course, by thinking in qualitative, conceptual terms, bright ideas may even be born!