How to Calculate the Intrinsic Value of a Stock (Full Example)
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- Опубліковано 22 тра 2024
- Today we do a full tutorial on how investors like Warren Buffett, Benjamin Graham, Charlie Munger, Seth Klarman, Peter Lynch and Mohnish Pabrai calculate the intrinsic value of a stock. Specifically, we look at the Discounted Cash Flow Analysis to see what we should be paying for the businesses we invest in.
#stockmarket #intrinsicvalue
DISCLAIMER:
Neither New Money or Brandon van der Kolk are financial advisers. The information provided in this video is for general information only and should not be taken as professional advice. There are risks involved with stock market investing and consumers should not act upon the content or information found here without first seeking advice from an accountant, financial planner, lawyer or other professional. Consumers should always research companies individually and define a strategy before making decisions. Brandon van der Kolk and New Money are not liable for any loss incurred, arising from the use of, or reliance on, the information provided by this video.
Hey guys, just wanted to let you know that if you wanted to learn the full Warren Buffett strategy (plus get an updated version of this video and 2 other simple valuation methods) we've recently released our completely new version of _Introduction to Stock Analysis_ over on New Money Education. Also, if you use the code SAVE50 at checkout, you'll get $50 off the price! newmoney.education/
I have been using one big 4 bank as my stock broker for the last 2years i think it's that time to rollout more cheaper options any suggestions?
@@petengochi Yes, close your account and stop trading options.
You should also factor in debt, especially if the debt exceeds the amount of cash on hand.
How do you determine that how much cash flow is good for the business? Is any cash flow is good ? Or is there any measurement to check ?
You should also add a terminal growth rate after the 10years because a business doesn’t just die after 10 years (those having much smaller impact on the valuation but they still do).
I agree that many people are considering NVDA as the "Stock of the year." However, I'm curious about which stocks could potentially become the next META in terms of growth over the next decade. I've allocated $200k for investment, aiming to retire comfortably.
I wholeheartedly concur; I'm 60 years old, just retired, and have about $1,250,000 in non-retirement assets. Compared to the whole value of my portfolio during the last three years, I have no debt and a very little amount of money in retirement accounts. To be completely honest, the information provided by invt-advisors can only be ignored but not neglected. Simply undertake research to choose a trustworthy one.
Certainly, there are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with ‘’AILEEN GERTRUDE TIPPY” for about five years now, and her performance has been consistently impressive.She’s quite known in her field, look-her up.
I was advised to diversify my portfolio among several assets such as stocks and bonds since this can protect my inherited portfolio of about $2.5m. I’m used to just buying and holding assets which doesn’t seem applicable to the current rollercoaster market plus inflation is catching up with my portfolio. I’m really worried about survival after retirement.
A lot of folks downplay the role of advlsors until being burnt by their own emotions. I remember couple summers back, after my lengthy divorce, I needed a good boost to help my business stay afloat, hence I researched for licensed advisors and came across someone of utmost qualifications. She's helped grow my reserve notwithstanding inflation, from $275k to $850k.
How can one find a verifiable financial planner? I would not mind looking up the professional that helped you. I will be retiring in two years and I might need some management on my much larger portfolio. Don't want to take any chances.
U.S stocks found their footing in the final hour of back-and-forth trading Monday after all three major index logged their worst week in three months, Heard someone say the best season for a financial breakthrough is now, especially with inflation running at a four-decade high. I'm still at a crossroads deciding if to liquidate my $117k stock portfolio, what’s the best way to take advantage of this down market?
That’s right! Downturns provide plenty of opportunities for regular people to build wealth from the scratch. However, you may need to get some professional advice from an Invest-ment planner if you need an aggressive return.
@@TiffanyLaos Recessions are where millionaires are created. After my port_folio took a big hit in April, I was forced to employ the services of an Invest-ment-analyst who has not only accrued a profit of $250k for me since then but has also taught me how.
@@leonarodwell >You are right! I diversified my $500K portfolio across various market with the guidance of an investment coach, I have been able to generate a little bit above $1m in net profit across high dividend yield stocks, ETF and equity during this red season in the market But the truth is that you cannot do that without a tested trading strategy
@@jirinamuzikova We’re only just an information away from amassing wealth, I know a lot of folks that made fortunes from the Dotcom crash as well as the 08’ crash and I’ve been looking into similar opportunities in this present market, could this coach that guides you help?
@@Gracej34 I am being guided by "ROSEMARIE AGATHA ALLORA" who I found on a CNBC interview where she was featured and reached out to her. She has since provided entry and exit points on the securities I focus on. You can look her up online if you care supervision.
I was told to spread my money across different things like stocks and bonds to protect my $750k retirement savings. Now, with the markets being shaky, should I keep adding money to my portfolio or consider other options?
If you lack market knowledge, your best bet is to seek advice or support from a consultant or investing coach. Contacting a consultant may sound simple, but it's how I've managed to stay afloat in the market and increase my portfolio to roughly 65% since January. It is, in my opinion, the best way to get started in the industry right now.
Mind if I ask you to recommend this particular coach you using their service?
I'm considering a review of my $600K portfolio allocations, particularly in light of the pause in interest rate hikes. I'm diversifying into tech stocks and renewable energy. They seem promising but i'm not so sure
It's crucial to have a well-thought-out strategy and not make impulsive moves based on short-term market fluctuations. Patience and a long-term perspective are key. You should consider a market expert to guide you.
Accurate asset allocation is crucial, and some individuals use hedging strategies or allocate part of their portfolio to defensive assets for market downturns. Expert guidance is vital for achieving this. This approach has helped me stay financially secure for over five years, yielding nearly $1M in returns on investments.
Please can you leave the info of your lnvestment advsor here? I’m in dire need for one
Credits goes to *Vivian Louise Dehoff* one of the finest portfolio managers in the field. She's widely recognized; you should take a look at her work.
Thank you for the lead. I searched her up, and I have sent her an email. I hope she gets back to me soon.
With all this scary news making the headlines, is this really a good time to buy stocks? I know everyone says the mrkt is ripe enough for buying but will stocks tank further this year? How long until a full stock recovery? How are other people in this mrkt raking in over $250k gains within months, I'm really just confused at this point.
No worries for me, I don't try to time the market. When I see that stock drops below its fair value with some margin of safety - I buy. Past 2-3 months have been huge shopping spree for me. I've got literally like 200k left of investing cash. Probably I will miss some occasions in the future months, but who cares as long as I got value?
You also have to look at the balance of your portfolio too. Not be over invested in one stock, I have made that mistake too but I fluked a good result! Never again, but I have a much bigger pot now.
@@adakkristinn Agreed i like this mentality. You can never time the bottom but if you're getting good value, take it and in the long term you'll be rewarded :) . Personally I’m always invested because the financial-market for me seem the only way forward with my long time horizon (accrued ROI of over $200k since 2020 )but if you don’t have that fortune of time it’s a tough market out there almost nowhere feels safe!
@@KelvinWallace You inspire me, I've only just started over the last couple of months. I've been doing plenty of research. In fact I'm really enjoying the aspect of learning and researching. $200k is a milestone, what’s your approach?
@@LionTowercoporation No doubt, the stock market is definitely the most awkward teenager with the wildest mood swings! I began with a skillset by name “Colleen Janie Towe” Her approach is transparent allowing total ownership and control over my position and fees are very reasonable in comparison with my ROI.
Yes stocks are pretty unstable at the moment, but if you do the right math, you should be just fine. Bloomberg and other finance media have been recording cases of folks gaining over 250k just in a matter of weeks/couple months, so I think there are alot of wealth transfer in this downtime if you know where to look.
Since the crash, I've been in the red. I’m playing the long term game, so I'm not too worried but Jim Cramer mentioned there are still a lot of great opportunities, though stocks has been down a lot. I also heard news of a guy that made $250k from about $110k since the crash and I would really look to know how to go about this.
There are actually a lot of ways to make high yields in a crisis, but such trades are best done under the supervision of Financial advisor.
Thats true, I've been getting assisted by a FA for almost a year now, I started out with less than $200K and I'm just $19,000 short of half a million in profit.
@@lipglosskitten2610 Impressive can you share more info?
@@hermanramos7092 Big Credits to Christine Jane Mclean she has a web presence, so you can simply search for, there are some others but it might be difficult to get them, but Christine has been a good guide through the year.
I am new to the stock market. Every stock that I bought so far, I was out of luck because I bought them when they were expensive. I feel I missed out on all the stock opportunities so far for the tech stocks.I believe having 150K yearly income would be a good investment so I want to plug all my savings into the stock market. I know this sounds a bit dull but I would like to know if I should learn investing or let somebody else (more capable like a FA) do it for me? Please share your thoughts. I am kind of tired of searching for a good stock to buy and losing all the good opportunities
Even with the right technique and assets some investors would still make more than others, as an investor, you should’ve known that by now, nothing beats experience and that’s final, personally I had to reach out to a stock expert for guidance which is how I was able to grow my account close to a million, withdraw my profit right before the correction and now I’m buying again.
@@user-hr5qz6rs4t
@@user-bc8dl9od6d I work with ELIZABETH PAN HOLT. You could look her up yourself, if you want
@@user-hr5qz6rs4t
The stock market is a complex system that is influenced by a variety of factors, including economic indicators, political events, and global trends. The relationship between policies and the stock market can be complex and multifaceted, and it can take time for the full effects of policies to be reflected in market trends. Therefore, it is possible that policies implemented in the past may have a "lagged effect" on the stock market, as their full impact may not be felt until later on.
you're absolutely right, the stock market is a dynamic and constantly changing environment that can be influenced by a wide range of factors, including government policies. It is important to approach investing with a long-term perspective, also, understand the potential factors that contribute to your financial growth, I'll advise you to seek the help of a professional investment coach and to carefully consider the potential risks and rewards of any investment decision.
@@RebeccaBellick Thats true, I've been getting assisted by a FA for almost a year now, I started out with less than $200K and I'm just $19,000 short of half a million in profit.
@@AlexanderTurke I’ve been down a ton, I’m only holding on so I can recoup, I really need help, who is this investment-adviser that guides you?
@@AlexanderTurke Thank you for this Pointer. It was easy to find her handler, She seems very proficient and flexible. I booked a call session with her.
I must say you are an inspiration because I started up investing and trading as a scared investor who doesn’t want to lose money, glad to say I’m very profitable now and bought my first house through it
Nobody can become financially successful overnight. They put in background work but we tend to see the finished part. Fear is a dangerous component, hindering us from taking bold steps we need in other to reach our goals. you have to contend with inflation, recession, decisions from the Feds and all. I was able to increase my portfolio by $289k in months. You have to seek for help in the right places.
@@ladymariangray I think it's not always about fear, Sometimes realistic factors discourage people from reaching their goals in life. For instance, I've tried investing in the stock market several times but always got discouraged by fluctuations of stock value
This is the problem! Most times people with little or no knowledge of the stock market try investing by themselves. It once happened to me, then I learned my lesson and contacted a US-based finance consultant by name Susan Agnes Hancock and everything changed. In in the first quarter of this year i made $370k and counting.
@@jenniferkyle6036 Impressive, that sounds good but how do I reach out to Susan ?
@@jonathanberg8183 Use your browser to search for the name to see her website
I started buying some more stocks at the beginning of the year, but nothing big. Why am I treating this so harshly? I still want to be the first person in my polygamous family to make a million dollars despite the fact that others in my field make six figures per person. I am well aware of the costs associated with working more to get more money.
If the market has taught me anything, it's that it usually makes a comeback, but I can't seem to concentrate on the long term, especially because important things like my retirement and my reserve are having a disastrous impact on inflation. I need a solution and a data trajectory that I can trust as soon as it is practicable.
Currently, the best market strategy is to work with a credible investing coach. Since a while ago, I've been in touch with a coach, mostly because I lack the depth of understanding and mental toughness to deal with the ongoing market conditions. You lack the information necessary to succeed in a competitive market, not because you're doing anything wrong, but rather because of your lack of experience.
In fact, I'm not sure whether I'm permitted to say this, but I'd suggest searching for “ Laurel Dell Sroufe” as she gained a lot of attention in 2020. She is both my coach and the manager of my portfolio.
She has an impressive career and impressive qualifications, so I can understand why she is so busy. I thus quickly copied Laurel's full name and entered it into my browser.
Currently I'm just being smart and frugal with my money, I'm in the green 47% over the last 15 months and l've accumulated over $700K in pure profits from DCA’ing into stocks, ETFs, dividends and futures. However I’ve been in the red for a month now. I work hard for my money, so investing is making me a nervous sad wreck. I don’t know if I should sell everything, sit and just wait.
Nobody knows anything you need to create your own process, manage risk and stick to the plan, through thick or thin while also continuously learning from mistakes and improving
@@tonicruger It's a delicate season now, so you can do little or nothing on your own. Hence I’ll suggest you get yourself a financial expert that can provide you with valuable financial information and assistance
@@kurttSchuster For real, I've wanted to switch to a wealth manager. Please, could you recommend yours?
@@sherryie2 credits to NICOLE DESIREE SIMON, one of the best portfolio manager;s out there. she;s well known, you should look her up
@@kurttSchuster I just checked her out and I have sent her an email. I hope she gets back to me soon.
Discount Equation for those asking. CF / (1 + R) to power of N
Cf = Cash Flow
R = Discount Rate
N = Number of years.
Do you mean multiply by N, the power of is very different
@Ryan Tibbo I got you, thanks
Dude can you tell me which book taught you this? And are there any other financial tools used by investors? 😄
Thanks for this...was trying to wrap my head around the discounted values.
I hated when teachers gave us bare formulas in school and university. And I hate it now. And I hate this comment :)
I understand it perfectly and I can derive it and know why there is plus, division and power, but for the newbies it looks like black magic. Maybe some people now think that value investing is not for them, because they are too stupid to understand these formulas.
This channel is currently way below intrinsic value
Buying calls on it
When a joke is funny but also true
heheh...correct :)
Lol this comment is P/B= 0.2
What's the margin of safety would you give. 30 or 50 percent or more?
Despite not being a stock market expert, I have a significant portfolio. The recent November rally benefited others, but not mine. How can I capitalize on this upswing to boost my $600k portfolio and safeguard against further declines?
Best rally this year. Be cautious despite optimism. The economy is still shaky & uncertainties for 2024 persist. I'm Committed to diversification & maintained up to 25% in the last two quarters. It's yet about a strategic approach, not predicting market moves. However if i was in your shoes, i will consider financial advisory.
Agreed, You have to be deliberate in making good profits in this mkts. When confronted with a similar dilemma, we consulted with a fiduciary who assisted us in constructing a robust portfolio. It has endured the test of time and grown to a high seven-figure sum.
@@greekbarrios I hope it's okay to inquire if you're still collaborating with the same fiduciary and how I can get in touch with them as i'm in a similar situation to the initial commenter?
She goes by ‘’Heather Ann Christensen’’ I suggest you look her up. To be honest, I almost didn't buy the idea of letting someone handle growing my finance, but so glad I did.
excellent share, just copied and pasted on the internet, spotted her consulting page ranked top and was able to schedule a call session. Ive seen commentaries about advisors but not one looks this phenomenal
Great video !
+ Those who are wondering how to calculate discounted case flow. Here’s the formula:
DCF= [CF/(1+r)^n]
Where:
CF = Cash Flow in the Period
r = the interest rate or discount rate
n = the period number
Hi. Thanks for the formula. I just have one question and I have no one to answer.. So we should sum all the DCFs and 10*FCF together, right? $306644 is the number but how can it be compare with the stock price? The stock price wouldn't certainly be like $200000, right? Thanks in advance.
Thank you! Saved my mind today!
Been watching, listening, and paying attention to all of predictions and forecasts since early Covid. He hasn't disappointed yet 👌
Well said! I am also here to learn how to invest after listening to a lady on tv talk about the importance of investing and how she made 7 figures in 3 months, somehow the video taught me nothing and left me even more confused, I'm a newbie and I'm open to ideas on how to invest for retirement
@@harrisonmichael5047 lookup MARTHA ALONSO HARA , this is her name online, she's the real investment prodigy since the crash and has helped me recover my loses
@@jesbensommichael8397 Despite the economic crisis and the rate of unemployment now is the best time to invest
@@harrisonmichael5047 Investment now will be wise but the truth is investing on your own will be high risk. I think it will be best to get a professional👌
@@jesbensommichael8397 Thank you, Going through her profile on her webpage out of curiosity, and surprisingly she seems proficient. I appreciate this.
I've been trying to understand how to work out intrinsic value for months.. yours is the only video that explains it clearly.. thank you. You've helped me no end..
Been looking for this for months. Finally, someone who talks in a language people can understand. Thanks!
im watching (and i will watch) this video time and time again. The info here is so good that it deserves to be well analyzed. GREAT CONTENT, UNPARALLELED QUALITY!
This was fantastic, thanks so much. For the first time ever, I just calculated the margin of safety share price for a company I'm following and I can use this model for future analyses.
Such a under rated channel. Insightful content as always. Thanks Brandon. Cheers mate.
Simple to understand - Thank you so much.
Great video mate, you are getting so good with your interactive B-roll 👌
That’s probably as close to understanding intrinsic value as I’ve ever been. I appreciate your video that shows this. Things can be explained confusing or plain and simple. Thanks for the plain and simple.
I've watched a bunch of videos on this subject, and this is the first one where I've felt like I understood it. Thank you.
This was one of your best videos.
I really apreciate this kind of content and hope for more in the future
One of the best videos I’ve watched in awhile thank you 🙏
Great explanation, Brandon! Thanks for sharing.
Fantastic video, intrinsic value and margin of safety are so well explained. Thank you, I learned a lot by watching!
Went to a pretty decent MBA school and seen a'lot of content but this is a really great and simple explanation of intrinsic value
Great video man. I've been trying to understand how to determine if a company is overvalued, undervalued, or priced correctly for the last day or so and it just wasn't making sense until I watched this video. You broke down the concept and explained it really well with easy to understand visuals and the slickest hairdo on the net. Thank you for putting this one out at just the right time!
Fantastic! I know it’s hard to make such a complex topic so simple. I think the one thing most investors miss when calculating intrinsic value, is that they look solely at the history to estimate growth in the future. The growth rate is very important, it arguably should take the most time in valuation. The past 10 years could be unusually good/bad due to acquisitions/dispositions affecting financials. Look to the future and make your best judgements! Thanks man, super helpful.
I'm literally calculating this for a company right now and immediately realized the growth rate is where I'm held up. Thanks for bringing this up.
Thank you for providing the alternate names for the same things, such as explaining how "Total Capital Expenditures" is also found on the info sheet as "Payments for acquisition of property, plant, and equipment".
The hardest thing in learning about making your own investments, in my opinion as a beginner, is how so many different terms can mean the same thing. So thank you for flushing that out here, big LIKE.
I find so much value in your videos. There is so much useless crap on the internet these days, so it's really great when you find some truly valuable content.
"How's that for consistency?"
And that sly and sarcastic smile which he couldn't contain. 😂😂😂
I was planning on researching this tonight ! Thank you perfect timing.
Haha perfect timing indeed!
Same here ! Truuuuuly needed this!
I've watched several videos of yours accidentally now and I'm loving your channel. Subscribed!
I wish I could've run into this channel sooner, great explanation. Thank you so much!
I have been trying to crack the numbers in the table shown at 6:55 but I just can't see where is that 15% discount and how the hoola-hoop is applied. Tried from left to right, top to bottom and nothing... not a single hit of 15%.
Any one care to explain please which formula you use to calculate Discounted column? thanks in advance :)
You explained this better than my Accounting tutor, thank you!
Great explantion mate very interesting, thanks for sharing much appreciated.
this is the best video i've ever seen so far on intrinsic value!
This is terrific. Precisely just what I needed and so simply and well explained
This has to be one of the greatest videos to a beginners guide on value investing on UA-cam.
Thanks - for that wonderful illustration on calculating stocks - internsic value in stock markets!
First video I've seen from this channel, I love it, simple and effective. New subscriber.
This is hands down the best 15-min video describing intrinsic value and margin of safety. Excellent work. Please keep sharing this kind of knowledge. We need more Warren-Buffett, long-term investment education under these current market conditions. Thank you!
Mate, this is so on point! Loved the video, took some notes as well. Keep up the good work! Will definitely check out your other content as well! Thank you for sharing valuable knowledge! Cheers!
Great video thank you! Have just started my finance degree your explanation is so clear :)
Wow great video on how to analyze stock. This is probably the best video on investing I've seen yet.
This helped big time, thank you!
So many great things to say about this video. It makes the concept seem so easy and accessible. The minimalistic charts and graphs also help a lot
Exactly my thoughts, down to the simple graphs.
Absolutely fantastic video. I've lost count how many times I've watched this now!
A great explanation of the three most important words in investing, thanks for sharing!
You really helped me understand the intrinsic value. Nice video!
This is one of the best videos I’ve seen on investing in a while. So clear. I really learned something.
Thank you. Finaly I have the piece of info that I needed and I understand it.
Man ole man I’m glad I came across you. Thanks for all your videos!
Really nice overview mate - Super clear & concise from start to finish 👏
Brandon does a fine job of explaining the general concept of how this works. It is clear and easy to follow. Brandon’s videos, in general, are like this, and thus are a pleasure to watch. However, calculating the cash flows into their discounted versions would have been helpful, as I am totally new to value investing.
In my efforts of trying to understand how to do this in a real-world scenario, I found that the most elusive figure of all is the actual discount rate (often referred to in formulas as ‘r’). How do you arrive at this figure?? Most websites/examples just say “let’s assume a discount rate of XX%”, but don’t explain the ingredients to determine it in the real world.
1 year later... Not sure if you're still curious, but I can help to provide some insight: To calculate an appropriate discount rate, you want to use a rate that reflects the opportunity cost of capital and the expected rate of return for the company/investment. When looking at a DCF, there are two primary formulas that are used to calculate the discount rate: the weighted average cost of capital (WACC) and adjusted present value (APV) - I would definitely look into these terms to learn more about them. Hope this helps!
You can also use the current yearly free cash flow figure and check thr ratio of price/free cash flow... lets day the average p/fcf over the last 10 years is 20 ratio and the company makes 10bill in fre cash flow then it is 20x10 is 200bill and that is your number!
Excellent explanation of DCF much appreciated the way u have explained the whole concept in such a simpler manner. 👍
I really appreciate your graph. Thank you.
More of these kind of videos please!
Trying to test this out and I'm having trouble with the Discounted amount calculations. In the video, it doesn't look like the amount is being reduced by 15% each time. For example, 23,579 - 20,503 = 3076. 3076 / 23,579 = 0.13.
Same
Great video mate - it’s been awesome to see your channel grow over the years!
Great content. Well explained. You rock, man! Liked and subscribed 👍
Awesome, just bought your TAX courses :). Thanks for the discount Brandon!
It's hard to understand as a teen who's starting to learn but you definitely explained it very well and it is very important to know as a value investor thank you very much for the video it was great
Lucky you I wish I have had this opportunity to learn this as a teen ! Props to you !
Thanks for the video. You made this a little easier for me to understand. Cheers!
Great video.Very educational.Thank you very much.
For a 16 minute run down on basic financial analysis, this video is great.
I suggest a prospective investor would be wise to consider technology (e.g. digitalisation) impacts, competitive (disruptor) impacts, trends in consumer tastes, and business cycle (interest rate) impacts on future cash flows. These refinements may feel like speculation, but they undoubtedly affect your valuation. Today we are also necessarily speculating on the rate of emergence from pandemic business conditions.
I feel investors should be focusing on under-the-radar stocks, and considering the current nature of the stock market, Because 35% of my $270k portfolio comprises of plummeting stocks which were once revered and i don't know where to go here out of devastation.
Venturing into the market without the help of a professional and expecting profit is like turning water into wine you would need a miracle.
The issue is most people have the “I want to do it myself mentality” but not equipped for a crash that comes afterwards. Ideally, advisors are perfect reps for investing jobs and at first-hand experience, my portfolio has yielded over 300%, summing up nearly $1m, since covid outbreak to date.
referal please .... much more info needed!
*Natalie Marie Gentry* is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment..
Awesome video! Thank you for your informative and educational presentation on intrinsic value. Keep up the great work. Subscribed!
One of the best videos on UA-cam. I will probably watch this once a week.
I'm new to this and I've watched this video about 5 times now, and I've had to learn excel all over again but I'm so happy now I can work out the intrinsic value of all my stocks properly! Thankyou for explaining this in such a clear way! I feel I'm one step closer to making better investment decisions with a much clearer understanding! 👍
Sup dude, just wanted to let you know that I recently discovered your channel and the quality of your videos is amazing. Many videos on investing seem to very quickly glance over stuff and the rest is all hype, bragging or purely speculation, but yours are always calm and in-depth so that they actually have great educational value. Keep doing what you're doing 🚀
Couldn't have said it better meself. How's the investing goin ?
You justified cashflow and discount concept, great explanation 👍
Hello and thank you for your videos! What’s the difference with calculations of present video and calculations through EPS - Growth rate & estimated PE ? Which calculations we should use if the same ?
Literally been spending all my free time trying to understand this. Great stuff.
@@REALVINERGY we’ll see in 10 years
Wouldve been more convenient if you actually showed the calculations on how ended up with those discounted CF.
yeah, i'm doing the calculation my self and something is not adding up
@@nasero12 the 15% is compounding.
I was confused too he’s actually dividing the fcf figure by 1.15 and compounding it
@@nasero12 I did £23,579 x 0.85 for the discount rate and did not get 20503 so I’m fully lost at this point
@@masonsixsmith8371 I'm lost with the discount rate in this video too. I don't know where he got those numbers. But he has more videos explaining this same topic. Those are better
One of the best explanations on how to invest in the stock market I've watched.
Excellent content. Nicely explained. Great Value. Thank you Brandon.
Can you tell how to find the intrinsic value if FCF is negative.
By far the best explanation on 'margin of safety'. Overall good explanation!
This is really great content on Intrinsic Value Calculation. Margin of Safety is an really well written book. One of my favorite.
Ironic - it sells for over $1000, probably not a value investors first choice😆
I commend you for this very well presented nugget of knowledge.
Dude best video EVER! Thank you so much for the breakdown!
Very accurate! Thank you! 😊
Cheers!
VERY UNDERRATED. So far, you’re one of the BEST!!
That’s what I was looking for Tnx man really helpful!!!
Hi, I have been following your channel for over 1 year now and appreciate all the free content. Besides the reason I want to learn more about stock analysis, I really want to see this channel grow and support you, thats why i just bought your course "learn to invest" and I have to say I really do love it. Helped me a lot! Greetings from Germany
Hi Brandon, thank you for the video, the margin of safety concept is explained concisely and clearly. I have only one observation: at 14:40 you trace an orthogonal line between the 2 parallel lines of intrinsic value and margin of safety. I think that the line should be vertical, as that (even if expressed in % points) still refers to value, which is reported on the Y axis. Thanks again for your video. Best, Nicola
i agree
Great walk-through! Would have been good to connect the intrinsic value back to the stock price to see how you select the right price to buy at.
that would have been great
I was wondering about the same! how does the value of the company translates into the stock price.
Market cap / number of shares outstanding = stock price.
Intrinsic value / number of shares outstanding = intrinsic price.
Using the small store example, let's say you have 1000 shares for that store for investors to buy. The intrinsic value was $306,664. In this case, the stock would be trading at the intrinsic price if it cost ~$306/share.
With a 20% margin of safety, you'd have a buy signal for the stock at $255 (306/1.2).
Hope this helps.
Thks for the clear explanation.
I guess books has it but explained technically.
Th4 appreciate his effort and time to set up this video to explain the concepts simply and provides clear understanding.
No right or wrong but we are all wired differently.
fantastic, this is a video that I watch time and time again every while to remind me of the principal, thanks!
Thank you for the video Brandon! Would love to know your thoughts on position sizing as value investors. How much of our capital should we put per company?
Hi @Gerald Ong, from my own experience, I like to have 70-80% of my portfolio in less than 10 companies. So I never put more than 10% of my portfolio into any one stock. having a concentrated portfolio allows you to do a deep dive in to each company and really understand them. Hope this helps.
@@EarnMoreSpendLessInvesttheRest Thank you for the sharing! I've a few deep questions I wanted to ask actually.
The worry I have as I become more experienced, I realized is that 'deep dive' is relative... my intensive research is usually subpar compared to professional analyst who dive very deep(e.g digging into earnings per sq foot per restaurant in Mcdonalds by geography) and hence why I am very concerned about taking big positions and taking on too much risk. I worry I might feel like I know a lot about a company, but in actuality know very little about compared to the insiders and what's actually on the ground.
Also, even with a ~10 stock portfolio, I'm unsure of a good framework to determine how much of each (30% in your best company, then 10% in the next, 2% etc) Unless you put equal weightage in each company, which is counter-intuitive to the logic that I should put more money in places I have more convictions in no?
Great video ! Love how you structure your content :)
Thanks Michael!
Great video, thanks, very valuable.
Would you please apply this to evaluating ETFs?
Great video Brandon, wanted to ask you which method are you using to analyze a company DCF or Phil town margin of safety? Thank you