William O’Neil, founder of Investor’s Business Daily, showed this clearly by plotting price on one scale and P/E on the other scale versus time. In case after case it showed how price caused P/E’s to rise to ridiculous levels. Fundamentals did not limit the price rise.

Stocks often have tremendous runs before they ever have earnings. How many years did AMZN go with no earnings? They plowed everything into growth of their infrastructure.

Fundamentals have many issues. They often hide very important information in notes. Even if you are great at analyzing fundamentals, prices may not recognize their strength for a long time.

Fundamentals tend to be very important to value investors. Price is very important to growth investors. Once a value stock rises enough, it becomes a growth stock.

Price tells you everything immediately. Fundamentals tell you what happened over the past 3 months.

Stars uses two cap weighted ETFs. They weight the ETF based on price. The weight is price times shares divided by the total market cap of the ETF. Building this weight takes time and price performance that is greater than the average stock.

Fundamentals take a lot of time, price is instantaneously available.