Fundamental Value
Market Microstructure glossary · Adverse Selection & Information Asymmetry
Definition
The price that all traders would agree upon if they had access to all relevant information and could process it correctly.
Fundamental Value in plain English
Fundamental value is what something is REALLY worth — the price everyone would settle on if they had every relevant fact and reasoned about it flawlessly. It's the honest anchor that day-to-day market prices bob around: sometimes trading above it out of hype, sometimes below it out of fear. Think of a used car with one true fair price given its mileage and condition, even though different buyers might overpay or underpay on any given day. Nobody can see this value perfectly in real life — it's the ideal target that traders are all trying to estimate.
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