Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: kdavy who wrote (46897)	5/16/2001 10:07:33 PM
From: Charles Tutt	Read Replies (1) \| Respond to of 70976

I think the textbook answer would be that to arrive at the intrinsic value of a security you need to add up the discounted future cash flows. Unfortunately, that has little to do with the price of a stock in a real market, probably because both the future cash flows and the appropriate discount factor(s) are unknowable. Another "intrinsic" value is liquidation value. Unfortunately, that is not a number that can be readily arrived at from the numbers made available under GAAP. It, too, has little to do with the price in a real market, especially because people are interested in the ongoing business more than the tangible assets. Probably best is to figure out how much you, as a businessman, would be willing to pay for the whole business if you were taking it private, and divide that by the number of shares, but it's a very inexact process. All JMHO. Charles Tutt (TM)

To: kdavy who wrote (46897)	5/16/2001 11:40:46 PM
From: Gottfried	Read Replies (1) \| Respond to of 70976

kdavy, here's a calculator but the trick is to know what numbers to put in quicken.com Gottfried

To: kdavy who wrote (46897)	5/17/2001 2:45:11 AM
From: Sam Citron	Respond to of 70976

If you want to explore the concept of intrinsic value there is probably no better starting point than Graham and Dodd's classic Security Analysis. If my library were not currently in boxes, pending another move in 2 weeks, I would get it off the shelf and see what they had to say about it. It's true that the most traditional measure is discounted value of future earnings approach. To me the most interesting (useful) question is: "what is the intrinsic value of AMAT (1). end of May 2001, (2). Sept 2001 and (3). Dec 2001?" Did you know that equity future contracts have just been approved for trading by CFTC? By next year we will be able to let the market tell us what it thinks is the intrinsic value of AMAT at discrete time intervals. I would suggest that this will be a much more better answer to your question than what threaders happen to believe for it will reflect the combined judgement of participants in the rough and tumble of the marketplace, rather than mere idle speculation or the result of a limited economic model.

To: kdavy who wrote (46897)	5/17/2001 10:48:53 AM
From: Kirk ©	Respond to of 70976

Value of a Stock RE: a. what is the intrinsic value of a stock b. who do you calculate it. A stock is worth what someone is willing to pay you for it. no more, no less. I ask myself that all the time. Also, why does a "Big Head" piece of paper with Andrew Jackson's picture on it allow you to exchange it for a nice meal or a bag of groceries? The ONLY reason the "big head" 20 dollar bill has value to get groceries is the grocer believes he can exchange it for something he wants in the future. With inflation, he has to do it quickly as it looses value. Now if you give him a share of AMAT (maybe for 2 bags of groceries or a meal for two) then he can save that piece of paper and hope it gets more valuable in the future as the company he now owns a piece of can make money and he hopes they get better at it over time. To learn "intrinsic value" I'd suggest the books I have here: pw2.netcom.com I'd start with The Intelligent Investor by Benjamin Graham; Preface by Warren E. Buffett amazon.com I am also a BIG FAN of David Dreman's value investing and highly recommend: Contrarian Investment Strategies : The Next Generation: Beat the Market by Going Against the Crowd by David N. Dreman: amazon.com That should give you a good start! best regards Kirk Lindstrom