Some insight from BreakingViews on the dangers of fair value:
The latest stock market drop is not likely to finish the story. Investors will be no more impressed with fair value on the downward slope than they were on the upswing. Indeed the crumbling economy is only adding to the momentum of fear and deleveraging. The brutal turn from financial excess to credit squeeze already has decimated the market capitalisations of many companies. The shares of Citigroup fell 26% on Thursday alone. That sort of fall helps makes the stock market cheap. But it also takes away the will to buy.
The whole thing is a worthwhile, though sobering read.
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