the.com/stock valuation
guessing what a piece of paper is worth, using math to disguise the guessing.
means a method for estimating what a company's shares should actually be worth, based on its earnings, growth, and assets rather than what the crowd is paying today.
from formalized in the 1930s by benjamin graham and david dodd at columbia, who argued prices and value drift apart and built spreadsheets to prove it long before spreadsheets existed.
graham's rulebuy at a discount to intrinsic value, always
dcf matha company is worth its future cash, discounted today
warren buffettstill uses graham's methods, just pickier now
ironyevery model needs a growth guess nobody can verify
for instance
amazon 1997-2015 — barely profitable for 18 years, valued on growth alone
dot-com bubble 2000 — valuations assumed eyeballs equaled earnings, then didn't
berkshire hathaway — buffett's letters turned valuation into annual scripture