Sunday, July 22, 2018

Earnings Valuation....


When the Diff in  Value in the first field is (-21.80)..... the stock low price is 38/-....it means the value of the stock is below its intrinsic value and has a good safety of margin of 21.80% and so stock price is at its lowest price of 38/-.....

But in the second last field the Diff in Value is (+77.88)....the stock price is 1250....it means that the Value of the stock is 77.80% above its intrinsic value and has worst margin of safety and above all these the price of the stock is very high....@1250....

Now how can these be possible.... when the stock provides a very good margin of safety still the stock is at its lowest price.... and when the stock provides worst margin of safety...it is at its highest price... what kind of anamoly is these.... and we human beings are so insane and irrational....yes we are and that is how the stock market runs....

Also if you see in the last field the market realized that the value of the company is way above its long term averages and it's has to regress to the intrinsic value.... and as can be seen  the Diff in Value (12.2) has regressed towards its Long term intrinsic value.... and the beauty is along with it the price of the stock from a high of 1250....has also gone down to @610....

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