Warren Buffett Value Investing

DEFINITION : PERPETUITY IS THE TOTAL SUM OF FREE CASH FLOW OF A BUSINESS FROM A PARTICULAR TIME TO THE END OF IT'S LIFE AT A VERY CONSERVATIVE GROWTH RATE. THIS CASH CAN BE USEFUL TO CALCULATE INTRINSIC VALUE OF THE BUSINESS. THE FORMULA FOR PERPETUITY CASH IS: IN THE LAST POST ABOUT  DISCOUNTED CASH FLOW(DCF) I MENTIONED THAT INSTEAD OF TERMINAL CASH FLOW YOU CAN USE PERPETUITY CASH FLOW TO ESTIMATE THE CASH FLOW OF THE BUSINESS THAT IT CAN BE EXPECTED TO PRODUCE IN IT'S ENTIRE LIFE. PERPETUITY CASH FLOW IN MORE DETAIL? WHEN YOU USE DISCOUNTED CASH FLOW,  YOU FIGURE OUT THE CASH FLOW OF A BUSINESS FOR 5 OR 10 YEARS, BUT WHAT HAPPENS AFTER THAT? IF YOU OWN A BUSINESS FOR  10  YR, AFTER THE 10 YR YOU CAN EITHER SELL THE BUSINESS OR YOU CAN KEEP THE BUSINESS AND GET CASH FOR AS LONG AS THE BUSINESS LASTS. PERPETUITY CASH FLOW IS THE CALCULATION OF A BUSINESS CASH FLOW FOR IT'S ENTIRE LIFE AFTER THE  10  YR. YOU HAVE TO ADD THIS TO THE CASH YOU GET FOR...

                            DISCOUNTED CASH FLOW(DCF) VALUATION IS THE ONE THING PEOPLE ARE MOST EXCITED ABOUT.  THE VALUE OF A BUSINESS. MAYBE BECAUSE it's VERY MATHEMATICAL AND STRAIGHT FORWARD. BUT CALCULATING BUSINESS/STOCK VALUE IS NOT WHAT MAKES WARREN BUFFETT AND OTHER INVESTOR SUCCESSFUL. MOHNISH PABRAI SAYS "YOU SHOULD NOT HAVE TO USE EXCEL TO MAKE INVESTING DECISIONS.". BUT THAT'S PABRAI, ON THE OTHER HAND, WE AS NOVICE USUALLY HAVE AN URGE OR CURIOSITY TO UNDERSTAND HOW VALUATION WORKS. IN THIS POST I WILL TALK ABOUT DISCOUNTED CASH FLOW(DCF) METHOD. BUT FIRST, let's WATCH A VIDEO OF WARREN BUFFETT TO UNDERSTAND THE BASIC IDEA:    What Is Discounted Cash Flow(DCF)?   IN THIS VIDEO WARREN BUFFET TALKS ABOUT HOW A BOND HAS ALL THE INFORMATION ON IT BUT WE HAVE TO FIND OUT THAT INFORMATION FOR A STOCK. DISCOUNTED CASH FLOW(DCF) METHOD IS A VALUATION METHOD WHERE A STOCK IS TR...

INTRODUCTION   If You Came To This Blog Then You Are Probably An Avid Buffet Fan. I Personally Used To Know Buffet As The Second Richest Man In The World, And I Knew How He Is Supposed To Be The Best Investor In The World. However Few Years Ago I Started Getting Interested In Stock Market And Came To Know About Value Investing, And Warren Buffet Way Of Investing, His Ideas And Approach Were The First Instance Of Clear Thinking In An Otherwise Chaotic Markets. Over The Years I Have Come To Respect Buffett Not Just Because Of How Well He Invested But Also How He Lives His Life In A Positive Way     My Goal When I Was Starting To Understand Value Investing(And I Still Am) I Had Difficulty As A Beginner due To Lack Of Specific Information And Abundance Of The Wrong Information. With This Site I Intend To Provide Information On Value Investing In A Way That Is Comprehensive Even To A Novice. As I Learn More I Will Be Able To Provide More And Better Information....