The conventional way of thinking about fundamental value is rooted in subjectivity. I am willing to part with my purchasing power because this object delivers me “utility”, which is a function of my individual tastes and preferences. This then allows us to distinguish between the value with a commodity obtains from its use, and the value which comes from a belief that it can be sold on in merely in virtue of the fact that it is believed to have value in the future.
Well, it is allows us to distinguish conceptually between fundamental and other forms of value, but reality isn’t always so obliging to our theoretical distinctions. Consider the case of Apple. Apple stuff is cool. For sure that coolness is in some way anchored in various aesthetic and functional qualities, but my appreciation of those features is not independent of the opinions of those around me. Apple is a trend and a fad as well as a producer of handy and fun devices. So when we talk about the fundamental value of Apple shares, we’re talking about future sales and profit margins which are obviously dependent upon consumer demand – and consumer demand for Apple products is not just subjective but intersubjective. My tastes are (at least partially) a function of yours. And this interdependence has consequences.
If more and more people started thinking that, say, Apple was uncool because it is now *so* mainstream, and the demand for Apple products falls affecting margins and volume, from the perspective of equity valuation this is a hit to the fundamentals. But in what sense would such a development in taste be any more “fundamental” than, say, a change in the view of art market participants on the merits of Damien Hirst? Or a move away from the idolisation of the original towards the intellectual and aesthetic features of a piece of art regardless of its provenance?
As purchasing power accumulates in the hands of those whose consumption needs are trivial (due to both heightened inequality and general material prosperity), the consumption that does occur is going to be increasingly of the kind motivated by intersubjective rather than purely subjective preferences. We go from needing clothes because we are cold to wanting the latest designs because they are fashionable. We go from the need for nutrition because we are hungry to impressing acquaintances with our creations at dinner parties. And of course the process can reverse itself through the desire to actively reject fashion, either through prolific consumption of unfashionable goods (which itself can end up launching a new trend) or by opting for asceticism over materialism.
Fundamentally, a world in which our economically relevant tastes are getting progressively more interdependent is a world in which “fundamental” value is looking increasingly rather bubbly.