My thoughts on the Buffett Indicator – current Market Cap to GDP
The best cash flow measure is Warren Buffett’s Owner Earnings. If that is increasing faster than GDP, the fair value of companies will increase faster than GDP
Discounted Cash Flow
The danger in out-of-consensus analysts’ reports
The question then becomes whether the market is simply slow to recognize the value in the company or whether the analyst was too optimistic in their estimate of fair value.
Not everything that counts can be counted
It is difficult to accept uncertainty. It is tempting to try and escape it by kidding ourselves and each other, but that is liable to land us in greater difficulties.
How to buy stocks at bargain prices
Declining free cash flow may be a sign the company is investing for the future! Or it may be a very bad sign. Increasing free cash flow may be a good sign or a bad sign. It’s all in the interpretation of the financials.
Investment decision making in face of uncertainty
Robust decision-making embraces many plausible futures, then helps analysts and decision makers identify near-term actions that are robust across a very wide range of futures
The Equity Risk Premium and what to use it for
On this basis it could be argued that, at that time, since expected returns were well below historic norms, prices were too high.
CAPE’s halo falls with a thud
CAPE is ignorant of interest rates
Heart of stock valuation: subtleties of free cash flow
If a company’s capital expenditures are simply maintaining the company’s position in its markets, it free cash flow may be unduly high
The problem with analysts’ target prices
The sell side analyst’s target prices do not estimate fair value. DCF estimates do just that. Investors should not confuse the two.
Stock valuation in an age of intangible assets
About forty years ago Buffett experienced a Damascene conversion
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