When Valuations Go Wild, Even Analysts Start Doubting Their Own Compass

We’re living through a moment where market signals seem louder than fundamentals.

In the US, total market-cap-to-GDP has surged to over 220%, a level historically associated with extreme optimism. In India, the ratio is around 142%, well above long-term averages.

At the same time:

• The US Magnificent Seven are treated as guaranteed, “go to heaven” investments, priced as if nothing can ever go wrong.

• In India, every other IPO is welcomed as a once in a lifetime hidden gem, even when the financial statements tell a very different story.

This is the sort of environment where euphoria quietly replaces analysis.

And it’s exactly during such phases that even seasoned investment and business analysts begin to question their own frameworks:

“Are profits old-fashioned?”

“Does cash flow even matter anymore?”

“Should I adopt this new ‘modern’ valuation ideology?”

“Am I being too conservative?”

When markets scream louder than reason, patience begins to erode.

That’s when the real test begins.

Because history shows us something very clearly: market euphoria doesn’t just challenge valuations, it challenges conviction. It compels analysts to reevaluate whether the fundamentals they relied on for decades are still relevant or whether the new narrative is the “right way forward.”

But here’s the truth that has survived every bubble, every hype cycle, every disruption:

When Markets Get Euphoric, Fundamentals Become the Ultimate Test

Every few years, the market enters a phase where discipline and basics feel outdated. Profits, cash flows, and real business quality suddenly look like old theories from old textbooks. Growth-at-any-cost becomes fashionable, and losses are explained away as “strategic.”

This is precisely when analysts and investors must hold their ground.

Because when the tide eventually goes out, the ones who clung to fundamentals are the ones who ride the next wave with confidence. Those who, out of impatience, embraced every shiny “modern approach” without questioning its foundations eventually learn, painfully, that they had been swimming without support the entire time.

Markets can evolve. Narratives can flip. New buzzwords will always appear.

But value, profitability, unit economics, and genuine moats never go out of relevance—not in the past, not now, not ever.

So to every investment analyst, business analyst, and valuation professional feeling pressured by today’s noise:

Stay patient, stay disciplined and never forget,

"WHEN THE CLOCK STRUCK TWELVE, EVERYTHING TURNED INTO PUMKIN AND MICE"