How to Calculate the Intrinsic Value of a Stock (Full Example)

[@NewMoneyYouTube]

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[@petengochi]

I have been using one big 4 bank as my stock broker for the last 2years i think it's that time to rollout more cheaper options any suggestions?

[@Gnuch1414]

@@petengochi Yes, close your account and stop trading options.

[@Stabtakulor]

You should also factor in debt, especially if the debt exceeds the amount of cash on hand.

[@trishanchanda3631]

How do you determine that how much cash flow is good for the business? Is any cash flow is good ? Or is there any measurement to check ?

[@deyanrs1]

You should also add a terminal growth rate after the 10years because a business doesn’t just die after 10 years (those having much smaller impact on the valuation but they still do).

[@kortyEdna825]

I agree that many people are considering NVDA as the "Stock of the year." However, I'm curious about which stocks could potentially become the next META in terms of growth over the next decade. I've allocated $200k for investment, aiming to retire comfortably.

[@Pamela.jess.245]

I wholeheartedly concur; I'm 60 years old, just retired, and have about $1,250,000 in non-retirement assets. Compared to the whole value of my portfolio during the last three years, I have no debt and a very little amount of money in retirement accounts. To be completely honest, the information provided by invt-advisors can only be ignored but not neglected. Simply undertake research to choose a trustworthy one.

[@Pamela.jess.245]

Certainly, there are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with ‘’AILEEN GERTRUDE TIPPY” for about five years now, and her performance has been consistently impressive.She’s quite known in her field, look-her up.

[@SpiderSlayers]

Er...Stop this trick alright, if u wanna do an advertisement go somewhere else pls.

[@kingtigercrownestate9102]

​@@SpiderSlayers Report this crap and help get rid of it these bots are an infestation on people's channels like this one they are EVERYWHERE and completely annoying help report and get rid of his crap.

[@jonathanberg8183]

I must say you are an inspiration because I started up investing and trading as a scared investor who doesn’t want to lose money, glad to say I’m very profitable now and bought my first house through it

[@ladymariangray]

Nobody can become financially successful overnight. They put in background work but we tend to see the finished part. Fear is a dangerous component, hindering us from taking bold steps we need in other to reach our goals. you have to contend with inflation, recession, decisions from the Feds and all. I was able to increase my portfolio by $289k in months. You have to seek for help in the right places.

[@emilybrown2719]

@@ladymariangray I think it's not always about fear, Sometimes realistic factors discourage people from reaching their goals in life. For instance, I've tried investing in the stock market several times but always got discouraged by fluctuations of stock value

[@jenniferkyle6036]

This is the problem! Most times people with little or no knowledge of the stock market try investing by themselves. It once happened to me, then I learned my lesson and contacted a US-based finance consultant by name Susan Agnes Hancock and everything changed. In in the first quarter of this year i made $370k and counting.

[@jonathanberg8183]

@@jenniferkyle6036 Impressive, that sounds good but how do I reach out to Susan ?

[@jenniferkyle6036]

@@jonathanberg8183 Use your browser to search for the name to see her website

[@Raymondjohn2]

Yes stocks are pretty unstable at the moment, but if you do the right math, you should be just fine. Bloomberg and other finance media have been recording cases of folks gaining over 250k just in a matter of weeks/couple months, so I think there are alot of wealth transfer in this downtime if you know where to look.

[@hermanramos7092]

Since the crash, I've been in the red. I’m playing the long term game, so I'm not too worried but Jim Cramer mentioned there are still a lot of great opportunities, though stocks has been down a lot. I also heard news of a guy that made $250k from about $110k since the crash and I would really look to know how to go about this.

[@martingiavarini]

There are actually a lot of ways to make high yields in a crisis, but such trades are best done under the supervision of Financial advisor.

[@lipglosskitten2610]

Thats true, I've been getting assisted by a FA for almost a year now, I started out with less than $200K and I'm just $19,000 short of half a million in profit.

[@hermanramos7092]

@@lipglosskitten2610 Impressive can you share more info?

[@lipglosskitten2610]

@@hermanramos7092 Big Credits to Christine Jane Mclean she has a web presence, so you can simply search for, there are some others but it might be difficult to get them, but Christine has been a good guide through the year.

[@M11G10]

Great video ! + Those who are wondering how to calculate discounted case flow. Here’s the formula: DCF= [CF/(1+r)^n] Where: CF = Cash Flow in the Period r = the interest rate or discount rate n = the period number

[@jyj6462]

Hi. Thanks for the formula. I just have one question and I have no one to answer.. So we should sum all the DCFs and 10*FCF together, right? $306644 is the number but how can it be compare with the stock price? The stock price wouldn't certainly be like $200000, right? Thanks in advance.

[@fabioorcesi7482]

Thank you! Saved my mind today!

[@JaykeTurner]

The stock market is a complex system that is influenced by a variety of factors, including economic indicators, political events, and global trends. The relationship between policies and the stock market can be complex and multifaceted, and it can take time for the full effects of policies to be reflected in market trends. Therefore, it is possible that policies implemented in the past may have a "lagged effect" on the stock market, as their full impact may not be felt until later on.

[@RebeccaBellick]

you're absolutely right, the stock market is a dynamic and constantly changing environment that can be influenced by a wide range of factors, including government policies. It is important to approach investing with a long-term perspective, also, understand the potential factors that contribute to your financial growth, I'll advise you to seek the help of a professional investment coach and to carefully consider the potential risks and rewards of any investment decision.

[@AlexanderTurke]

@@RebeccaBellick Thats true, I've been getting assisted by a FA for almost a year now, I started out with less than $200K and I'm just $19,000 short of half a million in profit.

[@RebeccaLee-ks4cq]

@@AlexanderTurke I’ve been down a ton, I’m only holding on so I can recoup, I really need help, who is this investment-adviser that guides you?

[@RebeccaLee-ks4cq]

@@AlexanderTurke Thank you for this Pointer. It was easy to find her handler, She seems very proficient and flexible. I booked a call session with her.

[@KillerBunny9462]

This channel is currently way below intrinsic value

[@nosemeocurrenada93]

Buying calls on it

[@hugoclarke3284]

When a joke is funny but also true

[@rahayu.handan]

heheh...correct :)

[@skywatchers9675]

Lol this comment is P/B= 0.2

[@aworldofcatsandkittens1780]

What's the margin of safety would you give. 30 or 50 percent or more?

[@MdSifatullahBari]

Been looking for this for months. Finally, someone who talks in a language people can understand. Thanks!

[@jesbensommichael8397]

Been watching, listening, and paying attention to all of predictions and forecasts since early Covid. He hasn't disappointed yet 👌

[@harrisonmichael5047]

Well said! I am also here to learn how to invest after listening to a lady on tv talk about the importance of investing and how she made 7 figures in 3 months, somehow the video taught me nothing and left me even more confused, I'm a newbie and I'm open to ideas on how to invest for retirement

[@jesbensommichael8397]

@@harrisonmichael5047 lookup MARTHA ALONSO HARA , this is her name online, she's the real investment prodigy since the crash and has helped me recover my loses

[@harrisonmichael5047]

@@jesbensommichael8397 Despite the economic crisis and the rate of unemployment now is the best time to invest

[@jesbensommichael8397]

@@harrisonmichael5047 Investment now will be wise but the truth is investing on your own will be high risk. I think it will be best to get a professional👌

[@harrisonmichael5047]

@@jesbensommichael8397 Thank you, Going through her profile on her webpage out of curiosity, and surprisingly she seems proficient. I appreciate this.

[@barrfrank7888]

I am new to the stock market. Every stock that I bought so far, I was out of luck because I bought them when they were expensive. I feel I missed out on all the stock opportunities so far for the tech stocks.I believe having 150K yearly income would be a good investment so I want to plug all my savings into the stock market. I know this sounds a bit dull but I would like to know if I should learn investing or let somebody else (more capable like a FA) do it for me? Please share your thoughts. I am kind of tired of searching for a good stock to buy and losing all the good opportunities

[@SteveHaynes-x9t]

Even with the right technique and assets some investors would still make more than others, as an investor, you should’ve known that by now, nothing beats experience and that’s final, personally I had to reach out to a stock expert for guidance which is how I was able to grow my account close to a million, withdraw my profit right before the correction and now I’m buying again.

[@MarkStammer]

@@SteveHaynes-x9t

[@SteveHaynes-x9t]

@@MarkStammer I work with ELIZABETH PAN HOLT. You could look her up yourself, if you want

[@MarkStammer]

​@@SteveHaynes-x9t

[@Gnuch1414]

Discount Equation for those asking. CF / (1 + R) to power of N Cf = Cash Flow R = Discount Rate N = Number of years.

[@harryl6274]

Do you mean multiply by N, the power of is very different

[@harryl6274]

@Ryan Tibbo I got you, thanks

[@karanwattamwar6395]

Dude can you tell me which book taught you this? And are there any other financial tools used by investors? 😄

[@piddersohoolihan2222]

Thanks for this...was trying to wrap my head around the discounted values.

[@egor.okhterov]

I hated when teachers gave us bare formulas in school and university. And I hate it now. And I hate this comment :) I understand it perfectly and I can derive it and know why there is plus, division and power, but for the newbies it looks like black magic. Maybe some people now think that value investing is not for them, because they are too stupid to understand these formulas.

[@lcmlcm2460]

That’s probably as close to understanding intrinsic value as I’ve ever been. I appreciate your video that shows this. Things can be explained confusing or plain and simple. Thanks for the plain and simple.

[@BoianOlenberg]

I feel investors should focus on under-the-radar stocks, considering the current rollercoaster nature of the stock market, Because 35% of my $270k portfolio comprises plummeting stocks that were once revered. I don't know where to go here out of devastation.

[@TimothysScotts]

The safest approach I feel to tackle it is to diversify investments. By spreading investments across different asset classes, like bonds, real estate, and international stocks, they can reduce the impact of a market meltdown.

[@BoianOlenberg]

@WilliamsJulians This is considerable! think you could suggest any professionals/advisors? I'm in dire need of proper portfolio allocation.

[@BoianOlenberg]

@WilliamsJulians Appreciate this recommendation, hopefully, I can get some insight into where the market is headed and strategies to beat the downtrend when I hear back from MARGARET MOLLI ALVEY.

[@DerangedPower]

6:34 just so people don't fuck up their numbers, the first row at $23579 should be looked at as a value at 115% i.e. already giving a 15% return in the first year. We then divide this value by 1.15 to bring the value back down to 100% to give us our discounted/true value. Then for each year following, you multiply the preceding discounted value by the rate of growth (which is 10% in this case) and then divide by 1.15 to give us the discounted/true cash flow value for each year. If you want the fast way to do this as well, divide the 10x value by 1.15^10 and you have the discounted value. Also note that you can change the discount depending on market conditions and the percentage return you think is suitable. 20% is probably a good figure to use right now.

[@BullInvestor]

Fantastic! I know it’s hard to make such a complex topic so simple. I think the one thing most investors miss when calculating intrinsic value, is that they look solely at the history to estimate growth in the future. The growth rate is very important, it arguably should take the most time in valuation. The past 10 years could be unusually good/bad due to acquisitions/dispositions affecting financials. Look to the future and make your best judgements! Thanks man, super helpful.

[@robertc801]

I'm literally calculating this for a company right now and immediately realized the growth rate is where I'm held up. Thanks for bringing this up.

[@Silvia-wz1em]

I find so much value in your videos. There is so much useless crap on the internet these days, so it's really great when you find some truly valuable content.

[@terungwaawarga]

I am new to the stock market. Every stock that I bought so far, I was out of luck because I bought them when they were expensive. I feel I missed out on all the stock opportunities so far for the tech stocks.I believe having 75K yearly income would be a good investment so I want to plug all my savings into the stock market. I know this sounds a bit dull but I would like to know if I should learn investing or let somebody else (more capable like a Fin-Advisor) do it for me? Please share your thoughts. I am kind of tired of searching for a good stock to buy and losing all the good opportunities.

[@aravindhanarvi1]

A good starting point is the book "One up on the Wall Street"

[@SatyaSanathani]

Invest in a mutual fund or ETF in the beginning and diversify your portfolio to minimize risks.

[@sethharasem-mitchell5368]

@@Alexiasarah when the stock value drops, don't pull out. All stocks fluctuate. When it drops, invest more - within reason so long as the business isn't a long term risk

[@JohnDoe-dp4kx]

Learn as much as you can, get good at it, be carefull, it will take time, baby steps but NEVER delegate you money management! My 2 cents.

[@brianf7931]

I was planning on researching this tonight ! Thank you perfect timing.

[@NewMoneyYouTube]

Haha perfect timing indeed!

[@karanwattamwar6395]

Same here ! Truuuuuly needed this!

[@RidingTheBadWeather]

This is hands down the best 15-min video describing intrinsic value and margin of safety. Excellent work. Please keep sharing this kind of knowledge. We need more Warren-Buffett, long-term investment education under these current market conditions. Thank you!

[@robertc801]

This was fantastic, thanks so much. For the first time ever, I just calculated the margin of safety share price for a company I'm following and I can use this model for future analyses.

[@TheWealthyCareer]

This has to be one of the greatest videos to a beginners guide on value investing on KZbin.

[@bobbobertson7568]

Went to a pretty decent MBA school and seen a'lot of content but this is a really great and simple explanation of intrinsic value

[@michaelrosell6584]

Brandon does a fine job of explaining the general concept of how this works. It is clear and easy to follow. Brandon’s videos, in general, are like this, and thus are a pleasure to watch. However, calculating the cash flows into their discounted versions would have been helpful, as I am totally new to value investing. In my efforts of trying to understand how to do this in a real-world scenario, I found that the most elusive figure of all is the actual discount rate (often referred to in formulas as ‘r’). How do you arrive at this figure?? Most websites/examples just say “let’s assume a discount rate of XX%”, but don’t explain the ingredients to determine it in the real world.

[@Theodore_e]

1 year later... Not sure if you're still curious, but I can help to provide some insight: To calculate an appropriate discount rate, you want to use a rate that reflects the opportunity cost of capital and the expected rate of return for the company/investment. When looking at a DCF, there are two primary formulas that are used to calculate the discount rate: the weighted average cost of capital (WACC) and adjusted present value (APV) - I would definitely look into these terms to learn more about them. Hope this helps!

[@WealthGameNation]

You can also use the current yearly free cash flow figure and check thr ratio of price/free cash flow... lets day the average p/fcf over the last 10 years is 20 ratio and the company makes 10bill in fre cash flow then it is 20x10 is 200bill and that is your number!

[@KelechIwuaba]

Literally been spending all my free time trying to understand this. Great stuff.

[@egor.okhterov]

@@REALVINERGY we’ll see in 10 years

[@nasero12]

im watching (and i will watch) this video time and time again. The info here is so good that it deserves to be well analyzed. GREAT CONTENT, UNPARALLELED QUALITY!

[@Jha.Prabhakar]

Hey Brandon Thank You Brother..You've Delivered One of The Finest Explanations on Intrinsic Value in Less Than 20 Minutes..Keep Doing The Great Work..Keep Educating Us.

[@Greggsberdard]

I was told to spread my money across different things like stocks and bonds to protect my $750k retirement savings. Now, with the markets being shaky, should I keep adding money to my portfolio or consider other options?

[@VictorBiggerstaff]

If you lack market knowledge, your best bet is to seek advice or support from a consultant or investing coach. Contacting a consultant may sound simple, but it's how I've managed to stay afloat in the market and increase my portfolio to roughly 65% since January. It is, in my opinion, the best way to get started in the industry right now.

[@crystalcassandra5597]

Mind if I ask you to recommend this particular coach you using their service?

[@jalonwilson883]

One of the best videos on KZbin. I will probably watch this once a week.

[@MohamedMusthfaRemzy]

Simple to understand - Thank you so much.

[@The_Scarlet_Pimpernel]

I've been trying to understand how to work out intrinsic value for months.. yours is the only video that explains it clearly.. thank you. You've helped me no end..

[@Eshel_Nagar]

It's hard to understand as a teen who's starting to learn but you definitely explained it very well and it is very important to know as a value investor thank you very much for the video it was great

[@musaabsi]

Lucky you I wish I have had this opportunity to learn this as a teen ! Props to you !

[@philochristos]

I've watched a bunch of videos on this subject, and this is the first one where I've felt like I understood it. Thank you.

[@A_francis]

I feel investors should be focusing on under-the-radar stocks, and considering the current nature of the stock market, Because 35% of my $270k portfolio comprises of plummeting stocks which were once revered and i don't know where to go here out of devastation.

[@Debbie.Burton]

Venturing into the market without the help of a professional and expecting profit is like turning water into wine you would need a miracle.

[@Theresaa12]

referal please .... much more info needed!

[@retsoptihs0]

That was enlightening. I managed to apply it to a company on the stock market but of course, like most great companies, they are overpriced. Still an enjoyable exercise though. Can I ask why we take a 15% discount for the next 10 years and then also add a margin of safety afterwards? I understand there's inflation, which has been skyrocketing of late, but that's not the norm and even then it hasn't reached 15%. I completely understand that someone like me would need a margin of safety of at least 30-40%. But I didn't quite understand the 15% discount (I could work it out with the company I was researching but don't quite get why we're applying such a high discount). Thank you for one of the best videos I've ever seen on the stock market.

[@Legui1231]

This was one of your best videos. I really apreciate this kind of content and hope for more in the future

[@geneticsmatter3834]

Thank you for providing the alternate names for the same things, such as explaining how "Total Capital Expenditures" is also found on the info sheet as "Payments for acquisition of property, plant, and equipment". The hardest thing in learning about making your own investments, in my opinion as a beginner, is how so many different terms can mean the same thing. So thank you for flushing that out here, big LIKE.

[@devereauxjnr]

Currently I'm just being smart and frugal with my money, I'm in the green 47% over the last 15 months and l've accumulated over $700K in pure profits from DCA’ing into stocks, ETFs, dividends and futures. However I’ve been in the red for a month now. I work hard for my money, so investing is making me a nervous sad wreck. I don’t know if I should sell everything, sit and just wait.

[@AlbertGReene-p8w]

Nobody knows anything you need to create your own process, manage risk and stick to the plan, through thick or thin while also continuously learning from mistakes and improving

[@devereauxjnr]

@@viewfromthehighchairr For real, I've wanted to switch to a wealth manager. Please, could you recommend yours?

[@devereauxjnr]

@@viewfromthehighchairr I just checked her out and I have sent her an email. I hope she gets back to me soon.

[@MultiplyingTalents338]

Folks like yourself makes KZbin an asset to folks like myself! Thanks mate

[@debarghaya]

Such a under rated channel. Insightful content as always. Thanks Brandon. Cheers mate.

[@GeraldOng]

Thank you for the video Brandon! Would love to know your thoughts on position sizing as value investors. How much of our capital should we put per company?

[@EarnMoreSpendLessInvesttheRest]

Hi @Gerald Ong, from my own experience, I like to have 70-80% of my portfolio in less than 10 companies. So I never put more than 10% of my portfolio into any one stock. having a concentrated portfolio allows you to do a deep dive in to each company and really understand them. Hope this helps.

[@GeraldOng]

@@EarnMoreSpendLessInvesttheRest Thank you for the sharing! I've a few deep questions I wanted to ask actually. The worry I have as I become more experienced, I realized is that 'deep dive' is relative... my intensive research is usually subpar compared to professional analyst who dive very deep(e.g digging into earnings per sq foot per restaurant in Mcdonalds by geography) and hence why I am very concerned about taking big positions and taking on too much risk. I worry I might feel like I know a lot about a company, but in actuality know very little about compared to the insiders and what's actually on the ground. Also, even with a ~10 stock portfolio, I'm unsure of a good framework to determine how much of each (30% in your best company, then 10% in the next, 2% etc) Unless you put equal weightage in each company, which is counter-intuitive to the logic that I should put more money in places I have more convictions in no?

[@margaritasbunny]

U.S stocks found their footing in the final hour of back-and-forth trading Monday after all three major index logged their worst week in three months, Heard someone say the best season for a financial breakthrough is now, especially with inflation running at a four-decade high. I'm still at a crossroads deciding if to liquidate my $117k stock portfolio, what’s the best way to take advantage of this down market?

[@TiffanyLaos]

That’s right! Downturns provide plenty of opportunities for regular people to build wealth from the scratch. However, you may need to get some professional advice from an Invest-ment planner if you need an aggressive return.

[@leonarodwell]

@@TiffanyLaos Recessions are where millionaires are created. After my port_folio took a big hit in April, I was forced to employ the services of an Invest-ment-analyst who has not only accrued a profit of $250k for me since then but has also taught me how.

[@jirinamuzikova]

@@leonarodwell >You are right! I diversified my $500K portfolio across various market with the guidance of an investment coach, I have been able to generate a little bit above $1m in net profit across high dividend yield stocks, ETF and equity during this red season in the market But the truth is that you cannot do that without a tested trading strategy

[@Gracej34]

@@jirinamuzikova We’re only just an information away from amassing wealth, I know a lot of folks that made fortunes from the Dotcom crash as well as the 08’ crash and I’ve been looking into similar opportunities in this present market, could this coach that guides you help?

[@jirinamuzikova]

@@Gracej34 I am being guided by "ROSEMARIE AGATHA ALLORA" who I found on a CNBC interview where she was featured and reached out to her. She has since provided entry and exit points on the securities I focus on. You can look her up online if you care supervision.

[@MrHrh747]

Thanks for the video, it was very informative. I don't seem to follow the calculations shown in this video. For instance, you took the free cash flow of $23,579 for the year 2021 and discounted it by 15%, and came up with $20,503. In contrast, when I subtract 15% from $23,579 (in an Excel workbook), I end up with $20,042. The same goes for the sum of the cash flows?

[@obelix247]

Found the answer in the comment section. DCF = CF/(1+r)^n where CF is the Cashflow, r the discount rate and n the number of years. Hope it helps.

[@keycheck03]

@@obelix247 👍 thanks

[@mlg4035]

@@obelix247 I was missing that too, thanks for posting an explanation!

[@kingtigercrownestate9102]

It just has to be to the second and third and fourth power as you go down one more line for the calculation to be correct which is not shown in the video. Second year has to be to the second power third year has to be to the third power and so on.

[@DevinOtt]

Great video man. I've been trying to understand how to determine if a company is overvalued, undervalued, or priced correctly for the last day or so and it just wasn't making sense until I watched this video. You broke down the concept and explained it really well with easy to understand visuals and the slickest hairdo on the net. Thank you for putting this one out at just the right time!

[@ryandoupe1019]

So many great things to say about this video. It makes the concept seem so easy and accessible. The minimalistic charts and graphs also help a lot

[@fminc]

Exactly my thoughts, down to the simple graphs.

[@Xtina2525]

Great walk-through! Would have been good to connect the intrinsic value back to the stock price to see how you select the right price to buy at.

[@kamraninvesting6818]

that would have been great

[@saroshkhoja3388]

I was wondering about the same! how does the value of the company translates into the stock price.

[@adamqah1]

Market cap / number of shares outstanding = stock price. Intrinsic value / number of shares outstanding = intrinsic price. Using the small store example, let's say you have 1000 shares for that store for investors to buy. The intrinsic value was $306,664. In this case, the stock would be trading at the intrinsic price if it cost ~$306/share. With a 20% margin of safety, you'd have a buy signal for the stock at $255 (306/1.2). Hope this helps.

[@HarrisRyan-oy8eo]

With this I think some stocks are flying under the radar despite their potential. It makes you wonder when the market will catch on to their true value. how can I invest $100K smartly to secure my future?

[@Theresaa12]

Agreed, partnering with the right planner is invaluable, my portfolio is well-matched for every season of the market, and recently hit 140% rise from early last year. I and my CFP are working on a 7-figure ballpark goal, tho this could take another year.

[@judynewsom1902]

Please can you leave the info of your lnvestment advsor here? I’m in dire need for one

[@Theresaa12]

*Sharon Lynne Hart* has always been on the top of my list..She is regarded as a genius in her area and well knowledgeable about financial markets. I highly recommend you look her up if you want excellent collaboration.

[@tacitregular2852]

Dirty, dirty scammers

[@Sipssmart]

Scum

[@marosilorant873]

I have been trying to crack the numbers in the table shown at 6:55 but I just can't see where is that 15% discount and how the hoola-hoop is applied. Tried from left to right, top to bottom and nothing... not a single hit of 15%. Any one care to explain please which formula you use to calculate Discounted column? thanks in advance :)

[@BethanyKabir]

You explained this better than my Accounting tutor, thank you!

[@raymondwilson2245]

First video I've seen from this channel, I love it, simple and effective. New subscriber.

[@EctoMorpheus]

Sup dude, just wanted to let you know that I recently discovered your channel and the quality of your videos is amazing. Many videos on investing seem to very quickly glance over stuff and the rest is all hype, bragging or purely speculation, but yours are always calm and in-depth so that they actually have great educational value. Keep doing what you're doing 🚀

[@mutchyp4000]

Couldn't have said it better meself. How's the investing goin ?

[@ryanjeffers8520]

One of the best videos I’ve watched in awhile thank you 🙏

[@gshridharanpillai9423]

"How's that for consistency?" And that sly and sarcastic smile which he couldn't contain. 😂😂😂

[@shrigauravfurniture1875]

this is the best video i've ever seen so far on intrinsic value!

[@bobharris5093]

This is terrific. Precisely just what I needed and so simply and well explained

[@michaelchan8031]

fantastic, this is a video that I watch time and time again every while to remind me of the principal, thanks!

[@InvestingwithHawar]

Hi Brandon, my only issue with DFCf models is that it’s not very good at helping you predict long term or even short term gains. I find I would miss out on a lot of opportunities if I discount at 15% even if I use 0 margin of safety. A prime example would be Exxon Mobil. If you assume fcf is around 11 billion for next 10 years with 0 growth you wouldn’t buy Exxon till share price reached $25 or less. The truth though is Exxon was a bargain when price was in low 30s as evidenced by the huge come back in stock price towards $50. We are living in an era with 0 interest rates and unlimited growth of money supply. I don’t think the market would allow us to buy anything below it’s Intrinsic value. Everything is overpriced and we would be lucky to get anything even slightly above intrinsic value.

[@jussef2057]

Yikes

[@Minsoo-Cha]

Turns out the market really was overpriced and now we might be able to find real 'margin of safety' stocks below intrinsic value!

[@thegibsonhustle9331]

Great video mate, you are getting so good with your interactive B-roll 👌

[@31128]

This is one of the best videos I’ve seen on investing in a while. So clear. I really learned something.

[@isaiasabinadisosagarcia936]

One of the best explanations on how to invest in the stock market I've watched.

[@ASXInvestor]

Really nice overview mate - Super clear & concise from start to finish 👏

[@sinper1]

Great video, may I please ask any website or Stock Screener can show the line of Intrinsic Value, so we can compare it with share price, and see the trends in the past as well? Thank you so much.

[@__Robin]

I found a site, they haven’t launched the product yet though - you’ll find it by searching ”rikas ai” on google

[@egor.okhterov]

@@__Robin how’s the progress?

[@__Robin]

@@egor.okhterov I got early access to the beta - it’s quite nice, easy to understand and saves a lot of time when exploring new tickers

[@anuj_bhandare]

I've watched several videos of yours accidentally now and I'm loving your channel. Subscribed!

[@mikeb5030]

Wouldve been more convenient if you actually showed the calculations on how ended up with those discounted CF.

[@nasero12]

yeah, i'm doing the calculation my self and something is not adding up

[@limitlesssky3050]

@@nasero12 the 15% is compounding.

[@benslye4330]

I was confused too he’s actually dividing the fcf figure by 1.15 and compounding it

[@masonsixsmith8371]

@@nasero12 I did £23,579 x 0.85 for the discount rate and did not get 20503 so I’m fully lost at this point

[@nasero12]

@@masonsixsmith8371 I'm lost with the discount rate in this video too. I don't know where he got those numbers. But he has more videos explaining this same topic. Those are better

[@Dessaquya]

Thanks! this video is great. You said you gonna discount it with 15% each year but i calculated about 5%? 20,503 - 15% should be 17427$ not 19612$. Which one is right?

[@zsolt-stockinvestingvideos4398]

This is really great content on Intrinsic Value Calculation. Margin of Safety is an really well written book. One of my favorite.

[@danielakomolafe8119]

Ironic - it sells for over $1000, probably not a value investors first choice😆

[@krishnaprakash3422]

Thanks - for that wonderful illustration on calculating stocks - internsic value in stock markets!

[@eej9488]

More of these kind of videos please!

[@boatmandan9945]

Cracking vid! Does any else get frustrated that a companies numbers change from website to website. I never know which ones to trust and use for calculations.

[@cristibtz]

You really helped me understand the intrinsic value. Nice video!

[@tradingfundamentals]

The emphasis on margin of safety is key! The way I apply that in my own investing is buying stocks at a discount to their average PE ratio over five years, amongst other methods.

[@MapAtlass]

Great video Brandon, were you able to get into Tesla at below intrinsic value?

[@bibekadhikari2298]

Haha

[@NewMoneyYouTube]

Tesla has always been a spec stock for me, but looking back to 2017 I reckon I did actually get it reasonably cheap (when you look at the 10-20 year plan). :)

[@mayankumraode9533]

one of the best video i have seen on this topic

[@ru.kiddingme]

For a 16 minute run down on basic financial analysis, this video is great. I suggest a prospective investor would be wise to consider technology (e.g. digitalisation) impacts, competitive (disruptor) impacts, trends in consumer tastes, and business cycle (interest rate) impacts on future cash flows. These refinements may feel like speculation, but they undoubtedly affect your valuation. Today we are also necessarily speculating on the rate of emergence from pandemic business conditions.

[@theandrewhenderson]

The best video on intrinsic value anywhere.

[@ffacualvarez]

Thank you so much! This is great. Just one question. Why are you assuming you sell the “local store” by 10x its FCF?. Is that somehow related to the 10 years you’ve owned the business? So if you had it for 15 years you assume you’ll sell for 15x its FCF?. Thanks again!

[@danny-cx4hv]

I have the same question!

[@filo4you]

Its just a number that he used assuming you would want the free cash flow to pay the investment in the business off within 10 years. The higher number you use the longer it takes to get returns. The lower number you use is more conservative and less riskier if you can buy it at that price

[@phoarey]

No. I fed my family doing valuation of public companies and privately held businesses for 40 years before I retired. The residual value multiple is a simplistic way of saying we can't project with any reliability after 10 years, so let's assume the business can be sold on X times the year 10 cash flows. The calculation is a stab at the value of earnings from year 11 to infinity. 'X' ie. The multiplier is usually conservative. It might be 10 for a public company or 5 for a privately held business.

[@phoarey]

No. See below

[@phoarey]

See below

[@jellymaneducation6168]

Absolutely fantastic video. I've lost count how many times I've watched this now!

[@AmirKhan-xd2tn]

hi man, was 15% a random number? how do you calculate the discounted percentage?

[@ablacksitcom8727]

I had the same question

[@egdapo]

Yes it was random

[@A3racada3ra]

It depends on the average annual return you want to make. 15% is a good number to start with since the overall market usually oscillates around 7-10%. You generally want to "outperform" the overall market, otherwise you could simply put your money into an index-fund with lower risk and lower effort.

[@AmirKhan-xd2tn]

@@A3racada3ra thanks bro

[@ablacksitcom8727]

@@A3racada3ra My guy, appreciate it

[@berengamble1882]

Just found this channel. Thanks so much for such excellent content. Nice to hear a fellow Aussie voice too.

[@dimnikolov]

Great explanation, Brandon! Thanks for sharing.

[@stewartmclean625]

Hi Brandon great video mate but I’m stuck on the discounted free cash flow, you said that we discount 15% on each years free cash flow so I don’t get how these numbers stack up? Sorry a bit of a noob, thanks again

[@KP-uj1wf]

Morningstar calculates and publishes the ‘Fair Market Value’ on most stocks each week. Can we not consider this their ‘intrinsic value’, to avoid the lengthy calculations you’ve shown? Thanks for the great video to understand how the value is determined.

[@WeLoveValue]

I would personally do my own calculations / valuations and then compare to Morningstar AFTER. Else you might get a bias. Personally I would never invest based on anybody else's calculation. I need to come up with the range of intrinsic value myself to feel comfortable buying the shares

[@ilyakan9332]

your outlook on the business might differ from Morningstars and by using their calculations you are essentially agreeing with their assumptions of future CF growth, etc. which might end up being inaccurate. You should try and find your own intrinsic value with the assumptions that make sense to you, not those that make sense to another investor. Hope this helps

[@dhillonnaturals]

I would like to add. If we purchase a share by others valuation method, we will know our margin of safety and most importantly when to EXIT

[@danguee1]

If that's a 'lengthy' calculation, maybe you don't have the stamina for this kind of thing? This kind of investing method requires lots of due diligence, understanding numbers - so you need to like doing it rather than finding it a pain..... Btw - very easy to write a spreadsheet for that, anyway.

[@muffemod]

Should have made that spreadsheet decades ago.

[@marshallhosel1247]

Buying a piece of a company, some of the best advice.

[@brettjohnson4932]

Trying to test this out and I'm having trouble with the Discounted amount calculations. In the video, it doesn't look like the amount is being reduced by 15% each time. For example, 23,579 - 20,503 = 3076. 3076 / 23,579 = 0.13.

[@Pekwe]

Same

[@tallitvak5325]

Damn, I learned most of my financial life in this 15 minutes, Thanks!

[@nicolaguida5612]

Hi Brandon, thank you for the video, the margin of safety concept is explained concisely and clearly. I have only one observation: at 14:40 you trace an orthogonal line between the 2 parallel lines of intrinsic value and margin of safety. I think that the line should be vertical, as that (even if expressed in % points) still refers to value, which is reported on the Y axis. Thanks again for your video. Best, Nicola

[@TheEdge080502]

i agree

[@saminda]

Finally understood the method. valuable content. Thank you

[@tantipornanan]

Thanks so much. By the way, could u please demonstrate how to calculate intrinsic value just 1 stock in term of your experience? Because this video just show how to find CF

[@kaisermabazza9520]

Thank you so much! I watched a number of videos explaining DCF and read articles by Aswath Damodaran, etc but I'm still confused. I can now move forward to compute the intrinsic value. The computed intrinsic is dependent on a lot of factors such as the number of years fcf is comouted, growth rate of the free cash flow, discount rate and the margin of safety. Thank you so much! Im investing in our local stock market in the philippines.

[@motrock93b]

If “investors” did this today, the stock market would drop dramatically. Today’s prices are euphorically disconnected from such strict financial reality/scrutiny.

[@Senormeni]

You mean in the US, right?

[@hisheeelijah1482]

@@Senormeni everywhere man everywhere

[@Senormeni]

@@hisheeelijah1482 the PE ratio of the indexes of emerging countries like Vietnam are like 11, 12... some 8. Check it. In the Spanish index there are good PE ratios for very great companies

[@pm6711]

You forget to take interest rate levels into account which also determines part of the valuation of equity

[@limitlesssky3050]

@@Senormeni emerging countries stock markets are really dangerous because you simply don't know their rule of the game, and prone to investor manipulation, making many of their company stock prices quite volatile.

[@howard8824]

Man ole man I’m glad I came across you. Thanks for all your videos!

[@brunelleschi77]

Hey Brandon, thanks for this nice and focused overview. I‘m just wondering about the math regarding the discount you put in the example for 2021. Expected Free Cash Flow is 23.579 (up 10% compared to 2020), however I don‘t quite get how you reach the discounted amount (20.503). If I deduct a 15% interest rate, together with an assumed 10% growth in cash flow (2020 -> 2021), shouldnt the equation be: 21.436 x 0,95 = 20.364 ? Even if I deducted 15% from the (future) cashflow of 2021, I get a different outcome: 23.579 x 0.85 = 20.042 Let me know where my logic is flawed or where it went wrong - Thanks again 🙏🏻

[@wautzer4930]

The discounted cash flow calculation is as following; it is the sum of cash flow of each period, divided by one plus the discount rate (15% in this case), raised to the power of the period number. So you got 23,579/(1+0,15)^1=20,503. For 2025 it is 34,522/(1+0,15)^5=17,1639~17,164

[@ΟδυσσέαςΚουσανδας]

Great content, thanks. If an investor is feeling ok with returns in the scale of 8% to 10%, should they discount the Free Cash flows with that percentage instead?

[@NoRegertsHere]

If 8-10% all you want, just buy the SP500 index and enjoy 40 years of easy sleeping.

[@DaleBEATBOX]

I'm new to this and I've watched this video about 5 times now, and I've had to learn excel all over again but I'm so happy now I can work out the intrinsic value of all my stocks properly! Thankyou for explaining this in such a clear way! I feel I'm one step closer to making better investment decisions with a much clearer understanding! 👍

[@FrancescoGuerrieri]

Fantastic video, intrinsic value and margin of safety are so well explained. Thank you, I learned a lot by watching!

[@omni1562]

What calculation did he do to discount the free cash flow in 6:54?

[@Gnuch1414]

CF / (1+R) To the power of N CF= cash Flow R= Discount Rate N = Number of years

[@jevcampbell2301]

Underrated KZbinr.. Every other person is just throwing Stocks and ticker symbols and tell people to buy smh...

[@DarkRana]

By far the best explanation on 'margin of safety'. Overall good explanation!

[@tundealade-bakare3113]

This is awesome !!! You just ran through my final year Business mathematics in the University in a couple of minutes. Awesome !! just Awesome . You have subscriber in me .Bruv. Welldone

[@ethanweaver1263]

where did you get the 10x FCF figure? Is that just generic?

[@d0718]

Usually you get the multiple from comparables. I.e. in this example you can work out how much other corner stores are selling for as a multiple of their FCF. You can get use the average figure or apply some judgement after

[@dhillonnaturals]

It's just like you are buying a share at PE of 10

[@o0grimmah0o95]

Is it not from the amount of years held?

[@egor.okhterov]

@@o0grimmah0o95 that is just coincidence

[@egor.okhterov]

If you have a stable business (coffee shop) which no longer growth, I am ready to buy it from you for 10x your annual income from that business.

[@marinkomarina884]

Ok, understood. But please explain me one thing: As far as I know you are an investor of Tesla. How could you figure out the intrinsic value of Tesla that makes you buy this stock or still hold it? In my opinion, even considering the most optimistic earning growth I can imagine, this stock is drastically overpriced. However, great channel and great job!