The tools under development here at Intelligent Investor Online are being developed to support fundamental bottoms up financial analysis. As is shown by this recent research and many research papers prior, this is a sound investment approach. And given the insanity of the markets, this is perhaps the only pragmatically sane way to evaluate investments over the long term.

Empirical Financial Research Blog has a well done cliff notes overview of the research.

OVERVIEW:
Value Investing: The Use of Historical Financial Statement Information to Separate Winners from Losers
Joseph Piotroski
University of Chicago, Graduate School of Business
Final Version: Published in Journal of Accounting Research, Vol 38, Supplement, 2000, however, version below is dated January 2002.
http://www.chicagogsb.edu/faculty/selectedpapers/sp84.pdf

Abstract:
This paper examines whether a simple accounting-based fundamental analysis strategy, when applied to a broad portfolio of high book-to-market firms, can shift the distribution of returns earned by an investor. I show that the mean return earned by a high book-to-market investor can be increased by at least 7 percent annually through the selection of financially strong high BM firms while the entire distribution of realized returns is shifted to the right. In addition, an investment strategy that buys expected winners and shorts expected losers generates a 23 percent annual return between 1976 and 1996 and the strategy appears to be robust across time and to controls for alternative investment strategies. Within the portfolio of high BM firms, the benefits to financial statement analysis are concentrated in small and medium sized firms, companies with low share turnover and firms with no analyst following, yet this superior performance is not dependent on purchasing firms with low share prices. A positive relationship between the sign of the initial historical information and both future firm performance and subsequent quarterly earnings announcement reactions suggests that the market initially underreacts to the historical information. In particular, 1/6th of the annual return difference between ex ante strong and weak firms is earned over the four three-day periods surrounding these quarterly earnings announcements. Overall, the evidence suggests that the market does not fully incorporate historical financial information into prices in a timely manner.

For those who are interested, here is a brief overview of XBRL .

New XML-Based Standard Now Being Used in Financial Statements

XBRL International, a 140-member consortium of leading companies (including founding member AICPA, which started the XBRL movement) developing XML-based business reporting standards, has announced that more organizations are using its eXtensible Business Reporting Language (visit www.XBRL.org). http://www.aicpa.org/pubs/cpaltr/may2002/newxml.htm

“The implications for Intelligent Investor Online are that the tools under development will be usable on an ever increasing set of corporate financial data.”

This is only the beginning. There is a lot of work between now and when the site starts to offer real value to users. But you have to start some place, and here we are today with only a beginning.