A group with a high anchor were prepared to pay three times as much for the same wine as a group with a low anchor
I would rather be vaguely right than precisely wrong
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 sell side analyst’s target prices do not estimate fair value. DCF estimates do just that. Investors should not confuse the two.
We are going to want to get a significantly higher return, obviously — in terms of cash produced relative to the amount we’re outlaying now — for a business than we are from a government bond. That has to be the yardstick at a base.
Opinions of fair value based on DCF calculations are necessarily inexact (rightly vague?). But, at least they at least ask the right question.
Price earnings ratios are a frail and shifting basis for determining fair value. They do not force investors to think through all the factors that go into a deep assessment of fair value.
Prices in the stock market are never a reliable guide to the fair value of a stock.
Price earnings ratios are simply a rule of thumb. They can lead you astray. But what is worse, they are becoming less and less valid with every passing year.
There is a lot of talk currently about the underperformance of value stocks compared with growth stocks over the last fifteen years. In fact, value investing has performed well against all other styles. This seeming contradiction comes from the fact that value investing and investing in value stocks are not the same thing.