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Aghhh.. i see, I think its because i cant see the posts you are referring to because I have that user on my "Ignore or blocked" list.




Its not a question of me correcting you, I am just questioning your thinking - which hopefully we both learn something from! So, its cheap because it fell 50% and its a 'quality' business, and its a 'quality' business according to your earlier post because of its 'financials'?


That doesnt seem to be a very logical conclusion to me, firstly I still dont think you are perceiving the difference betwen price and value, the price falling 50% does not mean that its cheap - regardless of quality of finanacials. It means the price has fallen 50%!


What is it about the financials that make it a quality business?


Forgetting about the price, do you have a process for working out a valuation for the company? Thats where I start with any business I am considering investing in, my method is to calculate IV (intrinsic value) based on a DCF model (discounted cash flow). I run several variations of it calculating cash flows in various ways and end up with a range of price valuation. Then I look at a whole range of metrics that interest me, ROE, operating margins, Enterprise value/earnings, debt/equity and many others.


A new aspect to my process of analysis of a business is I explain what the company does to my 13 year old son in one sentence - if I cant successfully communicate that to him I stop right there!


Anyway, i dont claim to have any special insight into this game, I just know its hard work and lots of learning, i have found a strategy and process that seems to suit my personality and ability - I am not so arrogant as to suggest it would be suitable for anyone else and I have certainly been doing it for too shorter time to draw any conclusions about performance. I am definitely on my L plates still!


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