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PIVOT Framework ("V"): Valuation

The Investing for Beginners Podcast - Your Path to Financial Freedom

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Valuation Dynamics: Discount Rates and Investment Strategies

This chapter delves into the two primary discount rates used in Discounted Cash Flow (DCF) models—the cost of equity and the weighted average cost of capital (WACC)—and their impact on valuation decisions. The discussion emphasizes the complexities of evaluating different companies, such as Tesla and Johnson & Johnson, and underscores the importance of a thoughtful approach to discount rates to navigate investment risks. Additionally, the chapter introduces the School of Investing, focusing on education and diversification in investment strategies to enhance decision-making.

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