Intrinsic Value Calculator?

[FFNow]

Intrinsic value calculation is not cast on stone as many have pointed out. I may get one intrinsic value and you may get another totally different intrinsic value even though we both may be looking at the exact same business. That is why margin of safety is emphasized so much, to "compensate" for any mistakes during our valuation process.

But most important of all, we should be looking at investing from a business perspective and not as a form of buying a paper. If we get this part wrong, calculating intrinsic value is futile. Intrinsic value calculation should be the last step we must undertake when evaluating a business and it's not the first one to look at. Hope this helps =)

[kctan]

Intrinsic value calculation is not cast on stone as many have pointed out. I may get one intrinsic value and you may get another totally different intrinsic value even though we both may be looking at the exact same business. That is why margin of safety is emphasized so much, to "compensate" for any mistakes during our valuation process.

But most important of all, we should be looking at investing from a business perspective and not as a form of buying a paper. If we get this part wrong, calculating intrinsic value is futile. Intrinsic value calculation should be the last step we must undertake when evaluating a business and it's not the first one to look at. Hope this helps =)

Hi FFNow,

Thank you for your reply. I am a reader of your blog!

[AlphaQuant]

there's a distinct difference between "valuation" and "price".

when the market clears, it sets a unique price. this is a single and unique number at that point in time.

however, there exists numerous valuation - which exists simply because of the different risk premiums from different agents.

which is the only reason why there's trading - u buy when value>price and u sell when price>value. if everyone thinks everything is fairly priced then there is no clearing.

so as life evolves, a person's risk premium adjusts and hence the valuation will need to adjust for itself as well - so it only makes sense that there's really no one best valuation method - it's what suits u that matters.