28-08-2023, 09:20 AM
I am a long-term value investor holding onto stocks for 5 to 8 years. The key is trying to see how the business will perform in the coming decade.
We don’t have a crystal ball so I try not be too clever in projecting the future. I do what I call a relative approach.
I look at the historical performance – normally over the past decade to smooth out the annual “noise”. Then based on my analysis, I judge whether the future is going to be the same, better or worst.
If it is worst eg due to digital disruption or secular decline, I stop there. If it is the same or better, I continue with linking it to valuation.
My base case is the value based on the historical performance. Then if the future is the same, I use the base case as my value. If the future is better, I will increase the base case.
I find that it is easier to do this than project individual valuation parameters. If you want to know more go to my article
Do you have a better approach?
We don’t have a crystal ball so I try not be too clever in projecting the future. I do what I call a relative approach.
I look at the historical performance – normally over the past decade to smooth out the annual “noise”. Then based on my analysis, I judge whether the future is going to be the same, better or worst.
If it is worst eg due to digital disruption or secular decline, I stop there. If it is the same or better, I continue with linking it to valuation.
My base case is the value based on the historical performance. Then if the future is the same, I use the base case as my value. If the future is better, I will increase the base case.
I find that it is easier to do this than project individual valuation parameters. If you want to know more go to my article
Do you have a better approach?