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Michael Mauboussin, Counterpoint Global – Everything Is a DCF Model (The Best Investment Writing Volume 6)

The Meb Faber Show - Better Investing

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The Importance of a DCF Model

A profitable company relyant on intangible assets that is growing rapidly will report negative net income. Intangible investments such as marketing spending, are reflected in full on the income statement. The key elements of a d c f model are the magnitude, timing and riskiness of cash flows. Bondholders get paid before stockholders, which means that bonds generally have less risk than stocks.

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