The Intrinsic Value Podcast - The Investor’s Podcast Network cover image

MI279: The Joys of Compounding w/ Gautam Baid

The Intrinsic Value Podcast - The Investor’s Podcast Network

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The Importance of Reverse Discounted Cash Flow Operations

In your book, you talk about looking for companies where the markets' expectations aren't pricing in what you think will happen. You can simply carry out a reverse DCF operation and compare the markets assumption with that of your own to decide whether you want to invest in the company or not. I'm much more comfortable being a high P multiple for a business which get us to basic human needs like shelter foodbasic essentials like medicines. There you can basically have a much more longer time horizon and longer set of assumptions but in businesses which can be threatened by technology, they're trying to become much more conservative in my estimates.

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