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Subject:  Re: Discounted Cash Flow Model - Negative FCF Date:  2/8/2011  4:30 PM
Author:  TMFValuemoosie Number:  1637 of 1675

I dodge the CapEx issue as a direct adjustable/forecastable input because I'm lazier than Joe is. If it looks good/normal I grind it through an easy FCFF cruncher and live with the output. To put it another way I don't start with the revenue line. But I'm a mark with chalk cut with an axe guy. A better handle of a the money machine can be built, if you understand the moving parts, by doing it the long way.

Lazier, or perhaps wiser. I mark with a (searching for something really tiny and accurate here.... um, a laser), but I also cut with an axe. And a blindfold.

Meaning, I get much more value out of the forecasting process, understanding the moving parts, than I do from the final fair value output number. Most of the time I run something through my DCF spreadsheet, and by the time all the tweaks make sense, I don't even bother with the "perfect number". The biggest mistake you can make with a DCF is to believe the output. Best to run several forecast scenarios, and develop a range of fair value.

Now Jack is probably just farther along the curve than I am. I still find value in doing it the hard way, but someday a lot of that might be second nature and I can apply shortcuts.
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