Definition
Fundamental Analysis is a valuation methodology that assesses an asset’s intrinsic worth based on its inherent characteristics, quality, and underlying factors rather than current market prices or sentiment. This approach seeks to determine what an asset should be worth based on objective criteria.
Significance in Alternative Asset Valuation
Fundamental analysis complements market-based approaches:
Fundamental factors for alternative assets:
- Quality and craftsmanship: Materials, execution, condition
- Rarity and scarcity: Edition size, surviving examples
- Historical importance: Significance in the field
- Attribution: Importance of the maker
- Provenance: Distinguished ownership history
When fundamentals matter:
- Emerging categories without established price history
- Market dislocations where prices diverge from inherent worth
- Unique items without direct comparables
- Long-term value assessment beyond current trends
Limitations:
- Alternative assets derive significant value from subjective factors
- Market prices may persistently diverge from “fundamental” values
- Determining intrinsic worth involves subjective judgments
Fundamental analysis helps identify over- or undervalued assets relative to inherent quality, though market prices ultimately determine realizable value.
How Impossival Approaches This
We combine fundamental quality assessment with market evidence, understanding that both contribute to alternative asset values. Our analysis identifies items where market prices may not fully reflect underlying quality or significance.
Related Concepts
• Intrinsic Value - Fundamental worth of an asset • Market Approach - Valuation based on comparable sales • Fair Market Value - Market-based valuation standard • Market Value - Current market perception of worth