10-07-2023, 12:23 PM
Two metrics commonly used in valuing an asset: one is discount cash flow and another is comparison method.
DCF is as reliable as its discount rate, which is dynamic. Comparison method is subject to the changing market conditions.
Both metrics will affect the book value of a company. So we are dealing with too many moving parts when applying the value trap concept. It becomes a tautology or circular reasoning, doesn't it?
DCF is as reliable as its discount rate, which is dynamic. Comparison method is subject to the changing market conditions.
Both metrics will affect the book value of a company. So we are dealing with too many moving parts when applying the value trap concept. It becomes a tautology or circular reasoning, doesn't it?