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Strategies & Market Trends : Value Investing

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To: scipio_caelestis who wrote (61259)	9/1/2018 1:14:49 PM
From: bruwin	Read Replies (1) of 78777

My understanding of Buffett's 'Equity Bond' comes from the writings of David Clark, co-author of "Warren Buffet and the Interpretation of Final Statements" (do you have a copy ?) and the "Buffettology" books. An extract states ... ....he then provides an example via the following calculation .... So in Clark's example the Pretax Earnings per share was $54 and the Long Term Corporate Interest Rate was 6.5%. That gave the Equity Bond at 54/0.065 = $830 a share. To get the TTM Pretax Earnings per share I took the aggregate of AAPL's last four Quarterlies and divided that by AAPL's latest Shares Outstanding. When it comes to "discounted" calculations I'm usually somewhat sceptical of the answer one gets, especially when the future time period is long, because that answer is dependent on the"interest rate" one uses. The further into the future one looks the more unsure one is of a reliable answer. From Wikipedia we have ..... Get the interest rate "r" wrong then the greater that "n", the time period, is, the more incorrect will the value of DPV be .....

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