Is there a proper framework to value stocks? I read about Discounted Cash Flow , Relative Valuation and Fundamental Analysis. Is there a guideline to implement these strategies? - Seedly
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Anonymous

Asked 1w ago

Is there a proper framework to value stocks? I read about Discounted Cash Flow , Relative Valuation and Fundamental Analysis. Is there a guideline to implement these strategies?

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The intelligent investor by Benjamin Graham.

Security Analysis by Benjamin Graham.

The little book on Stock Market Investing by Jack C Bogle

A good exercise I like to do when I was younger was to find very old S&P500 Manuals and create portfolios using the numbers in 1990s.

But over the years, I guess valuation is really a combination of sectors which you really know as well as being able to identify trends before anyone else.

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Lok Yang Teng
Lok Yang Teng
Top Contributor

Top Contributor (Jun)

Level 9. God of Wisdom
Answered 1w ago

There are lots of ways you can do valuations. While, yes, there are some frameworks to valuation, it differs from individual due to the different assumptions made in the calcultions/formulas. For example, may be optimistic about the firm and have a slighly higher perpetual growth rate for the company. Even in DCF approach, there's different ways you can calculate, either by perpetual growth or by exit multiple. Sometimes, a blended analysis may be used with comparables analysis instead of just relying on one valuation method. Different margin of safety could be used when you derive at the final valuation.

You can read up more about these methods and importantly, learn about each component in the calculations. It'll help with the understanding and the development of the model.​​​

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