"Fair value" is arrived at by determining a firm's intrinsic value, its value in relation to historic trading norms for it, the firm's industry companions,and the market, generally. When one has arrived at something representing that valuation, it must also be put into a context of a changing domestic and world environment. A common mistake for many is to believe the recent past is the near future.
One must be able to interpret the balance sheet of not only the company they're pursuing, but that company's brethren, and the world's balance sheet, so to speak. When you can do this with some measure of comfort, the element of surprise begins to diminish.
Therefore, Dell's common shares will rapidly adjust to an economic- future in which Dell's common shares' "fair value" is as spoken before. In relation to the market as a whole, Dell will remain richly priced even as its common trades in the $20s.
That will not change, but the world will have.
T.V.H.
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