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The week's question
In March 2025, in the thread "Re: OT, out", Umm asked the members: "Do you think it is because America is made up of magical soil that makes businesses based in America magically profitable?" This week it is put to everyone again. The button below opens the small thread re-asking it - read what others have said so far, then give your own answer as an ordinary reply.
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Personal Finance / Investing Beginners
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Author: earslookin ✭x2  😊 😞
Number: of 95 
Subject: Re: How to invest (part 3 of 3) Shrewd'm style
Date: 02/11/26 5:28 PM
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No. of Recommendations: 12
I really enjoyed your Chapter 8 on valuing companies. The focus on finding strong businesses, thinking long
term, and being willing to skip an investment if you’re not confident makes sense.

I also agree that spreadsheets can give a false sense of precision. Changing a discount rate slightly can move
the numbers a lot, and that’s easy to overlook.

I did wonder, though, whether drawing such a sharp contrast with DCF might risk throwing the baby out with the
bathwater. The basic idea — that a business is worth the cash it can generate over time, adjusted for time and
risk — seems pretty foundational. Even Buffett has often said that the value of any asset is the present value
of the cash it will produce.

In fact, when we estimate earnings 10 years out, apply a future P/E, and compare that to today’s price, we’re
still using that same underlying logic — just in a simpler and more intuitive way.

I only mention this because newer investors might come away thinking discounting itself is flawed, when maybe
the real issue is how much confidence we place in the output. Any valuation method, whether IV10 or DCF, still
depends on assumptions about the future.

Overall, I think the framework is clear and practical. I just wonder if softening the contrast with DCF slightly
might make it even stronger.

Ears
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This community has written 94 posts about Investing Beginners. The article-length ones it recommended most:
How to invest (part 1 of 3) Shrewd'm style · 62 recs · 2026
How to invest (part 3 of 3) Shrewd'm style · 44 recs · 2026
How to invest (part 2 of 3) Shrewd'm style · 34 recs · 2026
Welcome! · 13 recs · 2023
Yield vs Coupon · 4 recs · 2023
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