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Non-Tech : Tulipomania Blowoff Contest: Why and When will it end? -- Ignore unavailable to you. Want to Upgrade?

To: sea_biscuit who wrote (3397)	3/13/2001 11:07:07 PM
From: SouthFloridaGuy	Respond to of 3543

So what is the company worth -- nothing? Should it be given away for free? It's worth the value of its Assets - Liabilities = Shareholders' Equity. Divide that by shares outstanding and you get Book Value. A business that makes no money for an extended period of time should be valued at its book plus a certain amount of goodwill.

To: sea_biscuit who wrote (3397)	3/13/2001 11:36:43 PM
From: Mad2	Read Replies (1) \| Respond to of 3543

Valuation is a bit complex, however liquidation forms a floor of support, valuation over ande above that is based on the DCF of future revenue streams. A conserative way of looking at this is trailing earnings. mad2 BTW Is it safe to infer that the p/e at the bottom in 1932 was due to "a problem with the size of e portion" If so the point made in WS is all the more valid, in that in 85-88 unemployement was higher than it is now which implies the economy had greater room (or capability) to grow than in 2000 when the p/e had increased 4 fold. Thus we should be discounting the "p/e" more today (as compared to the 85-88 period because its less likely the economy can grow inflation free.