Understanding Valuation in Investing

Valuation in investing delves into determining the worth of a company beyond its stock price. Stock price reflects market sentiment rather than actual business value. Key questions arise in this process: what is the company truly worth and why? While modeling future cash flows and predicting factors like tax rates are part of the valuation process, simplicity in assessment can also be effective. Warren Buffett's margin of safety concept highlights the importance of buying stocks at a discount to their intrinsic value.