The Motley Fool Discussion Boards

Previous Page

Learning to Invest / Valuation Strategies

URL:  http://boards.fool.com/now-jack-is-probably-just-farther-along-the-curve-29089793.aspx

Subject:  Re: Discounted Cash Flow Model - Negative FCF Date:  2/8/2011  4:59 PM
Author:  jackcrow Number:  1638 of 1670

Now Jack is probably just farther along the curve than I am. I still find value in doing it the hard way,

I doubt it. I too find far more value in the process than the final output which is why each company I own has a hand crafted, no cookie cutter, spreadsheet. What we focus in on probably differs by personality, experience and approach. My EVA output always changes when I get pickier about what goes into ROIC, IC and WACC.(stupid notes) Rather than mess with a fancier FCFF formula I create side metrics which track the bits and pieces that I think are pertinent.

As an aside I appreciate Dr. D's argument that in the end EVA = FCFF = FCFE if properly adjusted but I like the divergence, it gives me greater insight.

I'm am better at aiming and shooting quicker than I was years ago. Occasionally the hand crafted spreadsheet is built after initial purchase. CAT for example was a no brainer I had been waiting a decade for. Now with the more detailed spreadsheet I can keep watch on them so I can decide to hold through a downturn or sell out before we get there and pick them back up on the other side. Do I reinvest dividends or let them pile up in cash?

jack
Copyright 1996-2014 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us