Hi Saurabh
This valuation discussion crops up time and again in various forms in discussion threads esp during bull runs and rallies.
Whatever tools you have in your valuation toolkit – the true test is whether you trust it enough to make buy/sell decisions and earn money.
If you believe that earnings growth % over x period / stock price % over x period is a good tool to predict current valuations (whether high or low) & hence future returns then there is a thread called “quant investing” where you may want to put up your research and interested members can chime in with their inputs. There are several here who are well-versed with quant systems and enjoy the intellectual stimulation it brings
Broadly speaking there are four camps here at VP ( with a lot of overlap) – one camp are pure technical guys who look only at price movements – you will find them engrossed with various technical analysis subjects. No doubt it is a sexy notion that money can be made by reading charts and indicators.
Valuation people are the second camp. They believe that it is possible to value a company
by putting together numbers. Again the promise of hitting that magic formula that gives you an investible number is a pursuit worthy of spending your time. No less than Benjamin Graham believed that so you are in good company.
Business guys & Original thinkers- these are guys who love to think about the business, industry, triggers etc. They spend much of their time digging up information, connecting dots , doing scuttlebut etc. Sometimes they are so overloaded with information that they fail to pull the trigger on a stock decision at the right time!
Followers – These guys follow others and their ideas are borrowed. Spending effort in the aforementioned things is not for them and i can see why – when you have kickass people at VP freely sharing their views – it seems much easier to soak up the wisdom. The good ones know instinctively whether the idea is good or so so & are nimble enough to take decisions
Noisy guys – well, these people are there to clutter up threads by asking naive questions and take offense easily. Over time – the quality of questions improves as they settle into the camps mentioned above. We have all gone through this journey as beginners and some of the questions i have asked on VP are definitely cringeworthy
At VP – we are blessed with the entire eclectic spectrum of individuals and whatever camp you choose to identify with – the main idea is to be able to action your thinking based on your system at the right time and make some money.
Apologies for the ramble but hey it needed to be said!
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