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Technology Stocks : Dell Technologies Inc.
DELL 133.20+5.7%Nov 26 3:59 PM EST
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To: Chuzzlewit who wrote (148063)11/27/1999 6:08:00 PM
From: LemurHouse  Read Replies (2) of 176387
 
<<<It seems to me that the only theoretically meaningful way to value a company is to value its cash flows>>>

Chuzz, I agree with your essential point here, and if I were buying a business I would determine a value for it just as you have; plus or minus a few tweaks for good will and the like.

But when buying shares in publicly traded companies, I think that some consideration must be made for market perception, and inflation/deflation of multiples must be taken into account. As you know, I believe that the fundamentals rule...but the market often (usually?) has its own ideas and so the market "value" of a company is often wildly different from what a reasonable and responsible analysis would conclude.

This gets back to the perception/reality thing that was debated here a few weeks ago. I still abhor the idea of management trying to "manage" short term stock pricing. Reality/biz fundamentals are what matter most for both the business and the ultimate stock price. But being able to guage market sentiment is I think important for investors getting in or out. Best situation is to get into a great company when the street and all the analysts hate it. When/if the street falls in love with the company the stock price will explode but if its still a great company that doesn't mean one should sell it just because its popular. (Although value traditionalists will tell you to sell when the stock is "overvalued".)

I think its a difficult thing to place an accurate value on a growth stock, and that the effort has to include art as well as science.

FWIW.

Andy
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