A Beginners Guide to Stock Valuation (Intrinsic Value and Margin of Safety)

Today we discuss stock valuation and look at how to calculate the intrinsic value of a stock, and also discuss the importance of waiting for a margin of safety.
Full stock valuation video: • How to Calculate the I...
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#intrinsicvalue #marginofsafety
DISCLAIMER:
Neither New Money or Brandon van der Kolk are financial advisers. The information provided in this video is for general information only and should not be taken as professional advice. There are risks involved with stock market investing and consumers should not act upon the content or information found here without first seeking advice from an accountant, financial planner, lawyer or other professional. Consumers should always research companies individually and define a strategy before making decisions. Brandon van der Kolk and New Money are not liable for any loss incurred, arising from the use of, or reliance on, the information provided by this video.

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[@gabrielaethan4092]

Understanding your financial needs and chalking out a plan remains the smart way to prepare for the unexpected. few yrs in investing space and extremely pleased with the decision I made. The good news is it’s not too late, I'll suggest you find a mentor or someone with experience guide you especially in this recession.

[@aysinduarte]

Thanks for another great video Brandon. This video alongside your original videos for beginners dealing with stock valuation are very helpful

[@personalfinancewithcoachkelvin]

Love the infographics and analogies about the business machine! Also great to see youre still keeping true to the basics as you have learned more and grown your portfolio!

[@newmoney9885]

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[@Krogzaxants]

So much good information on this channel, love it! Thank you for sharing. And i'm glad i found your channel.

[@suthunah2134]

You do a great job of explaining businesses, in laymen terms, for the investor.

[@yosmuc]

Thank you for making it clearer !

[@FJUH]

Excellent content!! Very much appreciated!!👍

[@safwan1340]

great video for beginners coming to this field !

[@motivatesme6695]

Very good introduction! Thanks!

[@Kinggkj-yv9qb]

You did an great job explaining th equation without making it too equation like. I appreciate that

[@egor.okhterov]

I would change “buy below intrinsic value” to “buy below estimated intrinsic value”, because there is a single true intrinsic value of the company and we will know it only in the future. At the moment different people are estimating intrinsic value by using different discount rate, different earnings growth rate, etc. So every investor arrives at its own estimate of intrinsic value.

[@WeLoveValue]

very good point. we can never get an exact number its always just a range / rough estimate of the intrinsic value

[@MoneyMindsetM]

We need this kind of videos!

[@WeLoveValue]

Great explanation. Wish more new beginners would watch videos like this

[@Oyimsbaba]

Love this channel!

[@paolo4178]

great channel thanks for the hints!

[@newmoney7610]

*Thanks for commenting,I will refer you to my trade analyst and accountant to make good income,go more on digital assets*

[@Word187]

Great video and explanation. Thanks!

[@newmoney7610]

*Thanks for commenting,I will refer you to my trade analyst and accountant to make good income,go more on digital assets*

[@KaneLouis]

Great video thanks!!!

[@77magicbus]

Excellent work.

[@ionutpotolea]

It would be really useful to have an example DCF on a real stock.

[@NewMoneyYouTube]

I would love to do this, but unfortunately people cling onto the results and base investing decisions off of examples. That's why I don't like to

[@MrGuyTsurStiGy]

But some people would actually benefit trully from that. If some use your video to cut corners it is his own fault and he will probably make less money on his investment long term.

[@anonnona6940]

@@NewMoneyKZbin use a fake company. Alter all numbers from a known company. Or failed company from its glory days.

[@hurdur6828]

@@anonnona6940 THIS 👆👆👆

[@bmmk12]

@@NewMoneyKZbin Your Discounted Cash Flow column is not a pure 15% reduction, so showing how you got the figures you did would be helpful

[@Erinconway988]

I don’t know who needs to hear this but stop saving all your money. Venture into investing some, if you really want financial freedom.

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As a beginner trader u like to take the opportunity to earn a lot of money... Get a professional broker and start a career in trading

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Trading with Expert Joyce Harrell has been a game changer for me

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@@Saitahatakenaka she really made a good name for herself

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@@Mayuniita Please how can I contact expert Harrell?

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@@jodiefleming3068 you can easily get to her on teIe gram

[@wannaknowbad]

Great video. I’m subscribe to you but I’m just seeing this. Thank you!

[@shacharh8539]

Great explanation, will it be possible to request for google sheets video with technical calculation on a real stock report (:

[@mikeryan4345]

Hi Brandon,love this channel. Newbie investors. question is, how do you find the intrinsic value of a company like Boeing who has a negative EPS, NO PE ratio (only 5 yr high and low). if you plug these numbers you have negative values. is there another way to source these values.

[@JosephDickson]

When I can't find a stock i'm interested in within my margin I tend to place my money in VTI, VOO or three other low expense ratio index fund ETFs. So far only one company I've researched hits my margin at it's current price.

[@user-wb6gh5tg6w]

I appreciate your approach to teaching.. To my understanding this just proves how much we need an edge as investors because playing the market like everyone else just isn’t good enough, we just need to hold onto our hopes and wait to see how things turn out because market movements are almost always unpredictable. In my portfolio, I'm noticing more red than green.

[@yiehom8166]

How do you get that last multiplier (10) for the last cash flow to obtain the last value?

[@preshpesh552]

Great video, I am planning to buy some stock but I don’t know which is best for long term I am not use to stock investment, please help me or send me the best stock to buy for future at Least 1/2 yrs !

[@abebmoses7335]

i will not advice you buy share and keep for a whole 2 years, no. So many people making huge money on short term investment. Seek an expert advice

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@vicky, I have watch one of your interview on CNN Finance when you share your success story. Could you kindly drop her contacts here, I really want to have success investment portfolio like you?

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@@victoriadavid4975 Thank you for your insight Victoria, how can I get to reach her, and can you tell me🙏 more about her?

[@Andrea-jg8bz]

Thank you from Italy

[@davidwilson9976]

Love the 50% margin of safety target. Have to have the courage and conviction to invest and hold on for the ride when most people are getting off.

[@newmoney4479]

Chat her up for investment assistance

[@seunggyubyun1186]

At year 10 when we sell the business why do we times 10 to calculate the terminal value? where does the number 10 come from?

[@itsnicholas5970]

Great video Brandon. DO you watch the guy from money week?

[@ZzRaideMzZ]

Wait a minute... You didn't provide the formula of Terminal Value,because adding up all the future cash flow would not equal 25K. So how can we calculate that?

[@cameronrussell181]

Do you use the payback time valuation and the 10 cap aswell as the DCF model to come up with a price like Phil Town or just you he DCF model, if u could answer this it would help a lot ?

[@cameronrussell181]

Tanner Williams6 sorry that isn’t my type of investing, I am a value investor and need to truly understand the company, I know nothing about the stocks you are suggesting

[@messianvilla7213]

Brandon, love you 3000 ❤

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[@dayyumm1559]

Another great vid ! how do they come up with Intrinsic value when the business is running at a loss, like when its in growth stage ???

[@hurdur6828]

don’t trust the guy below with the watsapp PLEASE!! 🚨

[@investinstyle-financeinves1181]

The growth and tech boom has brought in a lot of new traders and investors that don't yet understand this concept.

[@enzopretorius7634]

Please can you do some examples for us on the next videos.

[@Mkvine]

Is there a book you can recommend?

[@jameswalker366]

Would you consider doing a video on how to value high-growth companies which are/have the potential to see exponential growth? For example both Facebook and Amazon had extremely high PE ration at certain points in time, and not long after their PE’s dropped as growth caught up etc. I appreciate that is a more advanced ( and arguably higher-risk) skill set , however it would be exceptionally helpful. Along side value investing, I believe this strategy has a place in all investment portfolios up to a certain % allocation. Cheers, and keep up the good work.

[@jarredwoolis4929]

It's the exact same, method. Growth rate and discounted cash flows. Looking for mis priced high growth companies is still value investing. When you start making big Growth rate assumptions tho for fast growers, higher chances of being wrong. Then your holding a biz, you paid too much for, but if its a biz/industry you know very well and think you can see something others can't, power to ya 👍

[@engjcsantos87]

which website is the most reliable to find the 10 year history of free cash flow?

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The one and only financial KZbinr who is fully honest with us🤗😍

[@JustGotRespawned]

Joseph Carlson? Learn To Invest? I agree that the amount of bullshit scammers out there is huge, but let's not discredit the ones that are actually transparent. :D

[@kernan.e8308]

Sven Carlin also

[@frankveps7934]

Hamish Hodder?

[@zerihuns5460]

How do you get the Discounted value?

[@michaelscott181]

Give example. Thank you

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[@TheDanzo96]

Thank you for laying out the steps. So many videos I see "You need to determine the intrinsic value and have a strategy for the next market crash" but they stop there. They don't actually explain the steps to determine the intrinsic value.

[@lappodamy5826]

@@user-lr3in6dq2r bot, gtfo

[@danguee1]

I really like DCF in principle. The one thing I have a problem with is: how do those annual cashflows actually come my way? Buybacks? Dividends (growth stocks rarely issue dividends)? The stock price when I sell? If that last one, then surely the only cashflow I can rely on is the terminal value - which is often very flaky....

[@Steven-wq8tx]

I’ve been doing DCF model valuations for a while now and noticed how overvalued the market is now. It’s absurd. I’m going to keep investing in globally diversified ETFs for now and get into individual stocks once the market corrects and dips

[@ravenreyes8051]

Is intrinsic value the same with fair value?

[@thomasgodard6222]

How would this work if you had negative earnings. Im commenting on this video since the other is 2 months old

[@dennismclean313]

Question. we've been told "NEVER" to time the market. But if you're waiting on the price to fall to where you want it (intrinsic value), wouldn't that be classified as timing the market?

[@thomasmcdonald2983]

No. Timing the market is trying to predict a specific time when a certain outcome is to occur (day, time of day,week, month, year etc) However simply waiting for your target entry price is not time specific, you are waiting for that price to arrive if and whenever that may be with no specific time or time frame in mind.

[@PUGSLTD]

Every time I want to look into something in details you make a video of that topic 🤣🤣 and you are by far my favourite channel as you are very detailed and informative so..... thank you 😁

[@newmoney9885]

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[@ouioui4247]

i cant seem to figure out how he calculated the terminal value

[@melnederpelt9036]

I dont understand how you calculate the discount with the intrinsic value. You say u discount the future cashflow by 15% but i just simply cant do it. Can somebody show me how you calculate the discount??

[@melnederpelt9036]

Okay i figured it out instead of using -5% (10%-15%) he uses -4,34918975% for some reason, somebody know why? It confused me

[@melnederpelt9036]

@@Peter54502 thank youu

[@evanhiggins7298]

You reminded me to mainly focus on established ETF's. I bought some VTV because value of top businesses

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[@PhillipeNover]

Bascially the book "Number one rule" by Phill Town. Awesome summery.

[@NewMoneyYouTube]

Love rule #1

[@Joesmith_138]

Hey brandon,I noticed someone has made an account that looks identical to yours without the verified tho and there tryna scam people in your comments,maybe pin this so people are aware brother.thanks for the content

[@lawrencetoshiyukihugo7134]

love it ^^)

[@stocklesnar3183]

Is there any way you could do a video on constructing a dcf on excell or something? i know a lot of people who could benefit from it

[@adrielkabo4273]

Hi brandon ... if u use 15% discount rate and then apply 50% margin of safety on top of it ... would it be the same with simply using 30% discount rate??

[@jarredwoolis4929]

No 23% gives you a 50% MOS. 15% gives you 4x in 10 years. 23% gives you 8x in 10 years. Hope this helps.

[@adrielkabo4273]

Thanks for the correction jarred ... So we can get to our desired MOS by just adjusting the discount rate accordingly??

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[@1Gelidus1]

very nice german-subtitle ;)

[@mischapeters5204]

He Brandon, my question has nothing to do with investing, but I was curious since you have a Dutch last name if you are able to speak the language, Dutch I mean?

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[@ezhilarasan5545]

Beautiful

[@IulianDanea]

I don't understand how 1100$ discounted by 15% gives 956.5

[@GustavoSN]

Neither do I. This is the part of the video I don't understand

[@Chris-ey7zy]

You have intrinsic value but that’s accounting value based on current pricing. Doesn’t measure exponential growth and companies becoming monopolies within its sector

[@Saintjohn2711]

Should one calculate the intrinsic value often?

[@FriendlyNeighborhoodNerd]

Whenever you want to buy a stock

[@Saintjohn2711]

@@FriendlyNeighborhoodNerd how often? annually? monthly? quarterly?

[@ezyaz]

hey Brendon, great message...BUT, to assist us Plebs, I'm keen to look at your valuation Course, In the interim, will this formula aid in calculating a skeletal Intrinsic value. Intrinsic value = (CF1)/(1 + r)^1 + (CF2)/(1 + r)^2 + (CF3)/(1 + r)^3 + ... + (CFn)/(1 + r)^n where: CF1 is cash flow in year 1, CF2 is cash flow in year 2, etc. r is the rate of return you could get by investing money elsewhere

[@Prajenikartofi]

🎉

[@splinx1819]

2:36

[@hinderyckxg]

I see at least one making profit of this all, namely yo by the fees for your courses

[@Herxh428]

1st

[@GameVaultGuides]

I'm confused as to where he got to a discount of 15% of where he would like to be year over year. How do you break down the desired rate of return?

[@ricekarispee2326]

Did stock valuation start as soon as the stock market was invented ?

[@laportafrank]

I find myself at a crossroads, uncertain whether to liquidate my $150,000 stock portfolio. I'm seeking advice on the best strategy to capitalize on this current market.>

[@ryanha2]

I was hoping for examples.... Don't tell me, show me. Disappointing.

[@NewMoneyYouTube]

Hey Ryan, did you check out the other video with the full walk through?

[@ryanha2]

@@NewMoneyKZbin I will right now, thanks for the heads up.

[@newmoney9885]

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I love the annoying anxiety inducing musix when learning about finances

[@newmoney9885]

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[@droolalot5795]

That's funny, lots of videos and no portfolio view. I don't think you invest anything. This is a fake YT guru money play..... Lol

[@newmoney7610]

*Thanks for commenting,I will refer you to my trade analyst and accountant to make good income,go more on digital assets*

[@jackbrady9738]

Alibaba has a 50% margin of safety below intrinsic value