[stereolambda]

What I mean is this flowchart:

use a financial model like Discounted Cash Flow for finding companies that are "objectively" severely undervalued -> buy them -> wait X years until they reach their "fair price" that you calculated at the start -> sell for a profit

Aswath Damodaran has some online academic content on valuation in that style.

The main problem nowadays is the "severely undervalued" part. People in general know too much to severely undervalue companies. The RoaringKitty's GME thesis was based on strong fundamentals, but also on his contrarian belief that they can still flourish despite being a brick-and-mortar business. It's interesting to see if he was right, but it's still a gamble. Anyway, the Reddit frenzy turned the whole story of his GME thesis into the craziness that we all know.

(Another problem is market reaching the "fair price", good luck with that?)

edit: Okay, so to better answer your question, RK at the beginning said that he is inspired by value investing but he doesn't apply it purely. As to fundamental analysis, I think most people do it but rarely use it in the specific way outlined above.

[fractionalhare]

No that model of investing is still very much alive. It's the basis of every long/short equity hedge fund. The successful ones do it in a more sophisticated way with some additional quantitative and data-driven analysis. But it's essentially the same model.

[valuearb]

All long term investing is fundamental based investing, and the market is just as inefficient now as when the Graham was writing.

Checkout Michael Burry as a more recent successful value investor, He was up on the market 400%+ over his first five years before The Big Short.

[sooheon]

> use a financial model like Discounted Cash Flow for finding companies that are "objectively" severely undervalued -> buy them -> wait X years until they reach their "fair price" that you calculated at the start -> sell for a profit

The math for discounting future cash flows may be objective, but every investor will come up with a different estimate of future cash flows. People in general don't "know too much to severely undervalue companies", because this implies future risks and growth are knowable. People may know how to read balance sheets, but very few are any good at forecasting risks and growth.

What's missing from your flow chart is "produce a quantifiable thesis for growth/risk that gives you a current valuation, judge the precision of this valuation and the uncertainty of the price/value gap closing, make your bet".