V7. Introduction to the Discounted Cash Flow (DCF) Model

[vijanatrix]

so say i have a market value of 20 bucks per share, and i calculate an intrinsic value of 22 per share. what per share offer am i supposed to make to existing shareholders

[savingandinvesting]

@vijanatrix If price in market $20 and value higher, in normal situation would of course pay market price via stock exchange ultimately. If talking about a takeover of company to buy more than 50% of outstanding shares or achieve control in some other way, would depend on value of controlling company, what shareholders would accept and how much value can be added with control (which also changes intrinsic value) - this would be very situation-specific. Not sure if that helps.

[01coyote13]

whats intrinsic value? is it the same as market value?

[savingandinvesting]

@01coyote13 Intrinsic value is true or inherent, internal value of security for example. An analyst or portfolio manager tries to find investments that have an intrinsic value that is great than market price that security trading at, with hope that market will ultimately realise that the investment is worth more - that true value is higher than price. Not the same by definition although market price could be same as intrinsic value of perfectly priced. Hope that helps.

[01coyote13]

@savingandinvesting thanks, it does help a lot, i assume that there are tools that ca be used to find the intrinsic value of a stock(ratios, ect)?

ASa finance student i find your videos quite helpful, finding quality and useful information about finance in general and sometimes its too advanced. I even find the books you recommend (the ascent of money) not only interesting and informative but educational,thanks again

[MrDarkness176]

The market itself is inefficient. Ben Graham had it right. There is a need for Dcf analysis, though you could simplify your explanation.

[BrilIiance]

I think you made a mistake in your last comment. Market efficiency doesn't tell us that that in developed economies, it's difficult to value companies, it tells us that valuing companies on our own time is a complete waste of time because all public information available for valuing a company is reflected in the current stock price. I don't buy into all of that, btw. I just wanted to make a clarification.

[WavesOfTrolls]

dcf is stupid LOL...

[austin7956]

my cat walked on the keyboard and this is where i ended up 0.o

[jliebenguth]

good stuff - thanks

[streetglow67]

DCF is probably the most important method of measuring a company.

[trisky1234]

Dude, this info is all over the place. It's not like he had the monopoly on this info until this video.. Go actually read about finance then come back.

[trisky1234]

passive debt

[Latvia681]

Are you reading???

[hippoferalkes]

soooo full of shit

[steppo72]

Great video and thanks for sharing. I am sure you'll profit from it. No idea why IncorruptibleTruth is so conservative about knowledge. Must be he doesn't know much or thinks he won't learn much in order to teach to someone.

[pakistanipimp1]

Excellent job in explaning

Some other examples

1) Value investing vs growth

2) Do you buy a stock or the company?

3) How to pitch a stock?

4) what is investment banking vs investment management?

5) What about a monthly report on - the economic condition?

6) What is this credit crisis - how to explain it to your grandmother?

[savingandinvesting]

Thank you very much for comment and ideas - some of these I had been thinking about and will def. do. Thanks again!