THE AMERICAN BULLETIN OF STOCK ANALYSIS

Conventional fundamental analysis commonly begins by interpreting statements, normalizing results, and deriving a valuation narrative. The procedure assumes that statements admit forward interpretation under continuity.

ABSA treats this assumption as nontrivial. It first determines whether continuity is internally governed and whether the structure possesses usable discretion under constraint. When discretion is absent, normalization becomes a rhetorical operation rather than an analytical one.

Value investing frameworks frequently rely on the concept of a margin of safety. The margin is typically defined as a discount to estimated intrinsic value and is treated as protection against uncertainty.

ABSA distinguishes uncertainty from inadmissibility. Where discretion is structurally absent, the concept of intrinsic value is not merely imprecise; it becomes undefined as an instrument for decision, because continuity depends on external permission. In such cases, the margin of safety is formal rather than structural.

Ratio-based screening relies on compressing complex structure into a small set of surface descriptors. Such descriptors can be useful for descriptive comparison, but they do not locate the binding constraint.

ABSA treats structural condition as categorical. Two structures may share similar ratios while differing materially in discretion under stress because their constraint transmission channels differ. ABSA therefore prioritizes constraint location over surface magnitude.

Credit analysis is typically concerned with default probability, recovery, and covenants. Those tools are oriented toward creditor outcomes under stress.

ABSA is concerned with whether discretion is internally governed before stress. It classifies the structure’s autonomy under constraint rather than estimating default likelihood. The object is different: ABSA classifies structural condition as a precondition for analysis, not a probabilistic outcome.