Natixis Research of France questions if the so called Fundamentals Really Exist ?
The fundamental value of assets is often referred to. However, we have seen, in the case of equities, the difficulty of calculating this fundamental value,
1. macroeconomic uncertainty (growth, profitability);
2. unstable and conventional nature of the level of the equity risk premium, offsetting between the risk premium and interest rates;
3. possible difficulty of using the long-term interest rate as a discount rate for the future revenues generated by the asset
If the fundamental value of an asset is uncertain and conventional, there can be major fluctuations in asset prices when the "convention" regarding their valuation is revised, which is clearly the situation for equities
