Michael Mauboussin – Active Asset Management - [Invest Like the Best, EP.02]
Invest Like the Best with Patrick O'Shaughnessy
What Are You Paying for Future Value Creation?
The value of a company can be broken down into two components. The steady state component, if you say a dollar of earnings, the multiple thatyou assigned to that would be basically the inverse of the cost of equity capital. If i pay 12 and a half times or less for current earnings, and those earnings are sustainable, i'm paying for nothing for future value. D then, time back to value investing, or low expectations investing.
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