Robinson: The concept of 'intrinsic value' in fundamental analysis is a fraud
Adam Robinson · #47 Adam Robinson: Winning at the Great Game (Part 1) · Dec 11, 2018 · at 43:42
Investor Adam Robinson critiques the foundational concept of fundamental analysis created by Benjamin Graham and David Dodd.
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“Intrinsic value is a fraud, and I can demonstrate that. It's a fraud for several reasons. First, I'm using air quotes. What he really meant by intrinsic value is true value. But he knows if he used the phrase true value of something, that people would say, hey, wait a second, what's the true value of Facebook stock, or the true value of gold, right? How do you, would you even determine that? So, he creates a phrase called intrinsic value. Nowhere in the book, several hundred, sorry, six or 700 pages long does he define it. Not once. That's not true. I think on page 29 he defines intrinsic value as that value justified by the facts. Well, that's not a definition. That's like saying gravity is when things go down. Like, okay, well, how do we, how justified? By which facts? There are many numbers in the book. Right? Receivables and various metrics by which one might determine, I'm using air quotes now, the intrinsic value, but there's not one formula. There's no intrinsic value equals x plus y raised to the nth root nth power rather plus this factor times 27. So Benjamin Graham, with respect, offers not a single definition of the phrase he Coins, nor any formula for determining it. And the reason he can't define it is there's no such thing as true value.”
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