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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: bruwin who wrote (61267)	9/4/2018 2:23:56 PM
From: scipio_caelestis	Read Replies (2) \| Respond to of 78775

Isn't the goal of value investing to establish some kind of intrinsic value (perhaps a range of values) by whatever means, upon which it is up to the investor to determine whether the subsequent margin of safety is large enough with respect to the current price of the security? Perhaps I should reformulate by saying the following, namely that the discount calculation is used to approximate the (intrinsic) value of the stock, while this approximation is influenced by the chosen discount rate. "The Interpretation of Financial Statements" by Benjamin Graham & Spencer B. Meredith, yeah I read that one and also "Financial Statements" by Ittelson. It is interesting and certainly important matter in the context of value investing... Concerning the calculations of the Bond Equity ratio, I think that for now it is not unreasonable to regard it as a very useful tool to quickly spot potential undervalued stocks, at least until I have read Clark's book.

To: bruwin who wrote (61267)	9/4/2018 4:40:54 PM
From: William Cloutier	Read Replies (1) \| Respond to of 78775

I don't think that a few fractions of a percent either way will make much difference, seeing as one is not putting it into a "discounted" formula as one uses, for example, for the DCF calculation. You are not putting the rate percentage to the "power of" anything, such as "1,15^10". Well, I think that when you divide the pretax earning by the r (whatever your r is) you're effectively calculating a perpetuity (discounted for infinity) or something like : Pretax earning * ((1-(1+r)^( - a very long period of time or infinity)) / r) when the t (time) is large, the numerator tends to 1 and you end up with Pretax earning / r when t is 10 for exemple, you have a fraction of the perpetuity If my maths are good, a few fractions of a percent will make a bigger difference with a perpetuity than with a smaller power of something. On financial statements, I think the BS, IS, CFS and CSE are all important because they act like checks & balances. Sometimes I read 10-Q/K backward: I start with the notes. Good Investing WIll