#13 - Getting Started with Intrinsic Valuation

<p>Today we discuss:<br> Why do you value a company?</p> <ul> <li>First principle: Opportunity Cost<br> </li> <li>Your returns are determined by the price you pay<br> </li> <li>It's a good anchor point<br> </li> <li>If there is some event that pushes the whole market down, if you know the value you can pick up great companies at cheap prices<br> </li> <li>Forces you to put in the work thereby avoiding obvious mistakes<br> </li> <li>You need to find a dollar that is selling for fifty cents<br> </li> </ul> <p>Intrinsic Valuation</p> <ul> <li>Present Value of future cash flow<br> </li> <li>If you had to invest in a neighborhood lemonade stand? How much will you pay for it?<br> </li> <li>Very simple lemonade example (<a href="https://docs.google.com/spreadsheets/d/1FBu2Td7vnva9DHSvWVOL3-XwTAQ1UtXT9Ihk5sO1G9E/edit?usp=sharing"><u>https://docs.google.com/spreadsheets/d/1FBu2Td7vnva9DHSvWVOL3-XwTAQ1UtXT9Ihk5sO1G9E/edit?usp=sharing</u></a>)<br> </li> <li>Discount rate: Let’s say that you’d take $900 today instead of $1000 exactly a year from now. That means you’d accept a 11.1% “discount rate” on that transaction.<br> </li> <li>Growth rate<br> </li> <li>Terminal value<br> </li> </ul> --- This episode is sponsored by · Anchor: The easiest way to make a podcast. <a href="https://anchor.fm/app">https://anchor.fm/app</a> --- Send in a voice message: https://anchor.fm/cold-brew-money/message