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Strategies & Market Trends : Free Cash Flow as Value Criterion -- Ignore unavailable to you. Want to Upgrade?

To: Andrew who wrote (84)	11/2/1997 2:05:00 AM
From: Pirah Naman	Read Replies (1) \| Respond to of 253

Andrew: > We're doing the same thing! Just coming at it from different angles. Yes, that is what I have been saying. :-) > should recognize that your method does indeed make assumptions about > long term My method only assumes that therre will be growth long term - nothing about rates. > Given the same input variables such as growth rate > and discount rate, we will come up with the same valuations. My method does not consider discount rates at all, except to compare. The only practical difference between our methods is that my method requires that the company have projected free cash flow over the next few years in excess of the "dsicount rate." If you consider the example of the quick Buffett test you will see that my test is just a slight expansion. Buffett's quick test gets the obvious cheapies; mine picks up a few more; your method, like Buffett's full scale approach, only serves to weed out stocks that are sky high. Pirah