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Investment Analysis Clubs / The BMW Method

URL:  https://boards.fool.com/kelbon-has-a-point-although-i-disagree-with-his-33017345.aspx

Subject:  Re: BMW Assumption #1 Date:  3/19/2018  7:56 PM
Author:  SubGuy Number:  42227 of 42349

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.
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