Nice post Anand. Determining value is something I've wrestled with quite a lot as well. Price is something that stares at you with precision but value is something the investor has to think a lot about. In the last 2 decades, some of the best investments globally would have been the likes of google, Amazon, etc. Yet I recall doing a DCF of google based on DRHP details during my MBA days and concluding that the price was too high. Even in India, an Asian Paints or Bajaj retrospectively have been great investments over the last decade but generally trading at high multiples most of time. Don't you think one risks missing out on great investments by paying too much emphasis to entry multiples?
But to focus on buy price and to know that I am buying at such price which gives me margin of safety, I need to know what is business intrinsic value..Otherwise with whom will I comare the price and derive the satisfaction of margin of safety? I mean i should compare Price with what exactly? I am confused here. Kindly help
Maybe you write an article about how you arrive at your walk-away price. Until then, shouldn't we see it as a theoretical article by a practitioner? :)
Well written Anand... thanks for these gems of reinforcement :-)
We appreciate your work, we look forward for more posts...keep educating us.
Nice post Anand. Determining value is something I've wrestled with quite a lot as well. Price is something that stares at you with precision but value is something the investor has to think a lot about. In the last 2 decades, some of the best investments globally would have been the likes of google, Amazon, etc. Yet I recall doing a DCF of google based on DRHP details during my MBA days and concluding that the price was too high. Even in India, an Asian Paints or Bajaj retrospectively have been great investments over the last decade but generally trading at high multiples most of time. Don't you think one risks missing out on great investments by paying too much emphasis to entry multiples?
Very nicely written
But to focus on buy price and to know that I am buying at such price which gives me margin of safety, I need to know what is business intrinsic value..Otherwise with whom will I comare the price and derive the satisfaction of margin of safety? I mean i should compare Price with what exactly? I am confused here. Kindly help
Maybe you write an article about how you arrive at your walk-away price. Until then, shouldn't we see it as a theoretical article by a practitioner? :)