From the course: Finance Foundations: Business Valuation
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Final advice on using business valuation techniques
From the course: Finance Foundations: Business Valuation
Final advice on using business valuation techniques
- So now we know a bit about business valuation. - We know about Discounted Cashflow Analysis, DCF, and we've also learned how to use market-based multiples to estimate the value of a business. - So here is the big question that is in your mind right now. Can we, as individual investors use our ability to do business valuation, to identify winning and losing stocks in the stock market. - And the answer is no. Let me repeat that, no. What was the answer? No, no, no, no. - Now why can't we clever people pick winning and losing stocks? We know about market multiples, we know about DCF. Why can't we beat the market? - So I'll simply state that the market is too fast. The market response to new information fast. In 15 minutes, the smart people in New York are constantly using super computers to do data analysis, to find mispriced publicly traded stock. - No academic research in accounting or finance has found any…
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