Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (4) | Ignore Thread Prev | Next
Author: DeliLama Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35  
Subject: Re: Needham notes Date: 1/11/2002 8:14 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 1
"...now if I could just figure out how to properly value these companies. I just got a book called Value Investing: From Graham to Buffet and Beyond and maybe this is a good stock to try out some of the things the author mentions."

Here's a link to my own recommended reading list:
http://boards.fool.com/Message.asp?mid=14838155

The thing to keep in mind with valuing businesses is that you can never be very precise. Who can say what free cash flow will be 5 years from now? Only time.

An exercise I often rely on is to develop a set of possible scenarios for the business: as many as possible. I try not to leave out any feasible scenarios. Then it's actually not that difficult to get a good sense for the value of the business for each scenario. Afterwards, I will try to estimate the likelihood of each one. The end result should give you a sense for the range of things that might play out and a sort of probability distribution of the value of the business.

Keep in mind that the worst and least likely scenario can potentially happen as it did for me recently with ASW: http://boards.fool.com/Message.asp?mid=16309681
If you scan down to the scenarios, Scenario 5: All hell breaks loose within the business actually occured the day after I posted it and the price actually closed very near to $10, down from around $26 the day before. Bad stuff happens.

DeliLama
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (4) | Ignore Thread Prev | Next

Announcements

Foolanthropy 2014!
By working with young, first-time moms, Nurse-Family Partnership is able to truly change lives – for generations to come.
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.
Post of the Day:
Macro Economics

Looking at Currency Ratios
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! 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