Tbh, I have wasted over 7 months, trying to find the exact number or range of PE.
But, In end, I can relate to two simple quote by warren and they are indeed true.
‘If would love to be approximately right, than being precisely wrong’
“A bird in the hand is worth 2 in the bush. Now 3 question to ask, A) Are we sure there are 2 or more in the bush? How much certain are we? In how much time those 2 birds came out?
There is just no formula or range of PE, all matters is what lies ahead, are we in position to execute nicely? How much cash it will generate? And that is it.
All we need is 2 things, a fair exit multiple, and the cash flows. Quality of CFs is all that matters. Indeed we do not want to pay a high price, but sometimes even a PE of 10 is high for some businesses, and PE of 50 is fair for businesses like titan, amazon etc.
As we know, 3 factors explodes your return, EPS growth PE expansion, Margin expansion.
1 question to ask, Are we finding patterns in randomness? Are we try to satisfy our platonic thirst by finding evidence explaining randomness by looking in history?
There is just no exact number or range.
As buffett says, even if you expensive price for great business, you will do well.
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