The connection between volatility and risk is unavoidable. We gen-
erally associate the two but make the connection via market price
trends. So, even fundamental investors tend to view volatility in terms
of price, which is a technical indicator.
Is price a valid test of risk? If you intend to identify long-term in-
vestments by analyzing fundamental indicators, how do you define
risk, other than in terms of price volatility? In this chapter we explore
the question of fundamental volatility—trends in sales and earn-
ings—as an alternate method for defining investment risk. Just as a
corporate forecaster wants to be able to identify predictable patterns ...