..........intrinsic Value Of A Stock.........
- Thread starter jatayoo
- Start date
HI
SURPRISE SURPRISE..... NO COMMENT SINCE THE LAST POST ON A VERY basic issue that concers everyone.
NOW Dear's we are approaching the times when everything will not go up up up.
It is Time to think abt INTRINSIC VALUE.
pL READ THE POSTS ABOVE AND LET US discuss.
I'll give you a hint....."Intrinsic value is not something that can be defined by a mathematical formula.It is certainly not DCF that is determined by how one see's the 'TERMINAL GROWTH RATE'... A ONE PERCENT DIFFERENCE IN THIS TERMINAL RATE MAKES A HUGE DIFFERENCE
So what is this "INTRINSIC VALUE " ALL ABT???
SURPRISE SURPRISE..... NO COMMENT SINCE THE LAST POST ON A VERY basic issue that concers everyone.
NOW Dear's we are approaching the times when everything will not go up up up.
It is Time to think abt INTRINSIC VALUE.
pL READ THE POSTS ABOVE AND LET US discuss.
I'll give you a hint....."Intrinsic value is not something that can be defined by a mathematical formula.It is certainly not DCF that is determined by how one see's the 'TERMINAL GROWTH RATE'... A ONE PERCENT DIFFERENCE IN THIS TERMINAL RATE MAKES A HUGE DIFFERENCE
So what is this "INTRINSIC VALUE " ALL ABT???
Difficult question. I've come up with a few possible (probably exhaustive) answers:
On a large scale:
1) An excuse for buying badly beaten down stocks and still losing money.
2) An excuse for selling stocks too early, only to see up run up a few hundred percentage more.
3) A mythical value to substantiate our random stock picks, thus making our random stock picks more intellectual than the other guy's random stock picks.
On a small scale:
Discounted value of future cash flows accruing to investors. A value which the stock is supposed to be quoting (and currently worth) in the long run, when everyone is dead, after making a few million assumptions.
On a large scale:
1) An excuse for buying badly beaten down stocks and still losing money.
2) An excuse for selling stocks too early, only to see up run up a few hundred percentage more.
3) A mythical value to substantiate our random stock picks, thus making our random stock picks more intellectual than the other guy's random stock picks.
On a small scale:
Discounted value of future cash flows accruing to investors. A value which the stock is supposed to be quoting (and currently worth) in the long run, when everyone is dead, after making a few million assumptions.
The actual value of a company or an asset based on an underlying perception of its true value including all aspects of the business, in terms of both tangible and intangible factors. This value may or may not be the same as the current market value. Value investors use a variety of analytical techniques in order to estimate the intrinsic value of securities in hopes of finding investments where the true value of the investment exceeds its current market value..............
For example, value investors that follow fundamental analysis look at both qualitative (business model, governance, target market factors etc.) and quantitative (ratios, financial statement analysis, etc.) aspects of a business to see if the business is currently out of favor with the market and is really worth much more than its current valuation.......
but in the end.....mkts remain more irrational than one can remain solvent.........so goes the saying.....
For example, value investors that follow fundamental analysis look at both qualitative (business model, governance, target market factors etc.) and quantitative (ratios, financial statement analysis, etc.) aspects of a business to see if the business is currently out of favor with the market and is really worth much more than its current valuation.......
but in the end.....mkts remain more irrational than one can remain solvent.........so goes the saying.....
http://www.investopedia.com/terms/i/intrinsicvalue.asp
Quoting the source should not hurt...or should it?
In fact, it's the first link in Google when you type "intrinsic value". This is getting more hilarious than I suspected
What point did you try to prove?
Quoting the source should not hurt...or should it?
In fact, it's the first link in Google when you type "intrinsic value". This is getting more hilarious than I suspected
What point did you try to prove?
Last edited:
hi
For quite sometime , say 7 to 8 yrs , i have googled and read and thaught over the matter.
The Balance sheet value is easy to ascertain and the return ratios as well.
The problem is that they do not have any room for the "imbeded value" at all.
Value Investing is not about finding the beaten down stocks.It ia about Great Companies at "Reasonable Prices"
We talk of "earning power" of a company....is it just groweth of EPS.This EPS can grow by simply the co buying back it's shares...TRUE??...Equity base expands and the EPS falls....TRUE?
SO EPS is not a way to assess the "earning power"
QUESTIONS QUESTIONS QUESTIONS......
Quoting the source should not hurt...or should it?
In fact, it's the first link in Google when you type "intrinsic value". This is getting more hilarious than I suspected
What point did you try to prove?[/QUOTE]
For quite sometime , say 7 to 8 yrs , i have googled and read and thaught over the matter.
The Balance sheet value is easy to ascertain and the return ratios as well.
The problem is that they do not have any room for the "imbeded value" at all.
Value Investing is not about finding the beaten down stocks.It ia about Great Companies at "Reasonable Prices"
We talk of "earning power" of a company....is it just groweth of EPS.This EPS can grow by simply the co buying back it's shares...TRUE??...Equity base expands and the EPS falls....TRUE?
SO EPS is not a way to assess the "earning power"
QUESTIONS QUESTIONS QUESTIONS......
Quoting the source should not hurt...or should it?
In fact, it's the first link in Google when you type "intrinsic value". This is getting more hilarious than I suspected
What point did you try to prove?
[/QUOTE]
hi
For quite sometime , say 7 to 8 yrs , i have googled and read and thaught over the matter.
Quoting the source should not hurt...or should it?
In fact, it's the first link in Google when you type "intrinsic value". This is getting more hilarious than I suspected
What point did you try to prove?
For quite sometime , say 7 to 8 yrs , i have googled and read and thaught over the matter.
Quoting the source should not hurt...or should it?
In fact, it's the first link in Google when you type "intrinsic value". This is getting more hilarious than I suspected
What point did you try to prove?
Hello,
That was intended for Mr.Sudoku, not for you Jatayoo.
Regards.
Hi,
From quite some time I am trying to find out how evidently stock prices trace their intrinsic value path using their historical data but yet to reach on a conclusion.
The bull bear cycles of the indian market affects all of the stocks giving momentum to all of them at the same time. If price of a stock is higher than the intrinsic value it should come down but momentum strokes it up. Inevitably it is bound to come down but only after the bull cycle of the whole market is over not in the middle. From the conditions I feel that the intrinsic valuation of stocks may hold good in the Wall Street but as Indian markets are widely speculative in nature are attracting huge money from FIIs and are highly susceptible to the world economy unlike US, the valuation techniques are not so effective to stocks at this point of time.
And also there is no sure way to know when that intrinsic value will be reached....e.g. WB found the intrinsic value of petro china very less compared to its cmp so he invested 500mn it in '02-'03. But for almost 4-5 yrs nothing big happened. Later everyone knows the story. So maybe if we do find the intrinsic value of stocks there is no timeframe in which the market will correct its price to that level......during which period the momentum investors may gain handsomely viewing the macro conditions of the market.
So what I am looking is if there is any method to find (maybe by looking historical data or market/sector conditions) the time frame which the stock will take to reach this level.
Regards,
ADAG.
From quite some time I am trying to find out how evidently stock prices trace their intrinsic value path using their historical data but yet to reach on a conclusion.
The bull bear cycles of the indian market affects all of the stocks giving momentum to all of them at the same time. If price of a stock is higher than the intrinsic value it should come down but momentum strokes it up. Inevitably it is bound to come down but only after the bull cycle of the whole market is over not in the middle. From the conditions I feel that the intrinsic valuation of stocks may hold good in the Wall Street but as Indian markets are widely speculative in nature are attracting huge money from FIIs and are highly susceptible to the world economy unlike US, the valuation techniques are not so effective to stocks at this point of time.
And also there is no sure way to know when that intrinsic value will be reached....e.g. WB found the intrinsic value of petro china very less compared to its cmp so he invested 500mn it in '02-'03. But for almost 4-5 yrs nothing big happened. Later everyone knows the story. So maybe if we do find the intrinsic value of stocks there is no timeframe in which the market will correct its price to that level......during which period the momentum investors may gain handsomely viewing the macro conditions of the market.
So what I am looking is if there is any method to find (maybe by looking historical data or market/sector conditions) the time frame which the stock will take to reach this level.
Regards,
ADAG.
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