No. of Recommendations: 0
Kelbon has a point, although I disagree with his implication that long-term CAGR charts provide zero useful information.

The BMW method is simply a model, an approximation of a real-world phenomenon.
The fact that CAGR charts adjust to new data over the long term is a feature of this model, not a bug.

Price is both a signal and an indicator of value. Unless a stock is headed straight to zero, there is always some price that is 'low enough' to represent good value.

For every example of a stock that chugs along with steady growth similar to its past (like MO), there are others that fell off the rails (like AVP).

The puzzle is to understand the limitations of this particular model, and use other types of analysis to differentiate between a good value and a value trap.

Constructive discussion is always welcome.
Print the post  

Announcements

BMW METHOD EVENTS

The 2009 BMW Method Conference has been cancelled, due to minimum attendance numbers not being met. We hope to continue the annual BMW Method Conference tradition next fall.

Learn about the first four conferences on the BMW Method Website.

The BMW Method FAQ

BMW Method Website
Annual Conference Videos and Other Resources & Services
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement