I see. I think I understand. So you would never have owned the likes of CHTR either - correct?
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Replying to @alphagen68
Just to be clear not referring to SBC, just highlighting another example of value creation without short-term earnings.
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Replying to @alphagen68
I use DCF to forecast. Growth faster than 25% is a no, unless it's painfully undervalued by conservative measures. I could care less about a few years of earnings; there's no rational way I could forecast $1m for normalized $6,600 absent sum-of-the-parts/net-net
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Replying to @Tinyvalue
DCF is definitely the best approach - but don’t just don’t extrapolate from recent years. Understand the business and build the model. You might be surprised how much FCF power a low earnings company can have in a few years. Good luck
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Replying to @alphagen68
Would you mind explaining how one would reliably extrapolate into the future absent recent history, beyond event-driven special situations? RIP low-risk high uncertainty; MoS today, knowing tomorrow won't work out perfectly; acquisitions & expansions generally unreliable.
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Replying to @Tinyvalue
By understanding how the biz actually works. Take subscription models (just one example) - huge up front costs (cust acq) but huge long term FCF when succssful. If you just extrapolate from past you will grossly undervalued many companies.
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Replying to @alphagen68
Change "when" to "if." Respectfully, I wouldn't know how to invest in the businesses you just described. Re retail, Lynch, who loved growth stocks, wouldn't invest in hyper earnings growth (>25%). Highly unpredictable; usually Wall Street darlings; usually high premiums.
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Replying to @Tinyvalue
you are missing the point. it isn't about any industry/model. it is about less math and more thinking. kodak was predictable but if u just extrapolated you would have gone broke.
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Replying to @alphagen68
I think a lot, probably too much. If you have a switch, let me know; I confide in Fisher big time. I'm adamant that cheapness doesn't universally equate value. A monkey would buy
$PDCO. Cheapness is 1 of 14 steps in my investing process takes haha.1 reply 0 retweets 1 like -
Replying to @Tinyvalue
sounds like you are off to an excellent start. also, when you do get conviction, go big! good luck
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And cheers for your comments. I really am an intellectual amateur.. But I do know my circle of competence very well. How that will change, we'll see.
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