I think DCF is most complex formula for valuation
-It is subjective technique and valuation by different people varies widely
-WHAT PETER LYNCH SAYS ABOUT FUTURE CASH FLOW AND DCF?
=As per peter lynch, how one can predict future of company and future cash flow?
=Peter lynch relies on PE and PEG ratio for valuation
=He further says, rather predicting future cash flow, one can study company’s future growth triggers like expansion, capex, new market, new products etc.
=He says, if one does not rely on future profit and cash flow, one will never buy stocks at high PE
-In one interview, Ramdeo agrawal of motilal oswal said, DCF is difficult method of valuation with high chances of errors.
So, if these legends find it difficult, how can we rely on our future calculations.
RATHER,
=Study past years performance and future growth triggers
=BUY STOCKS AT REASONABLE P/E AND NEVER BUY STOCKS WITH HIGH PE RATIO
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