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If we are doing discounted cash flow analysis, apple made about 70 billion in free cash flow. From the balance sheet balance sheet they have about 100 billion i
by samfisher83 6y ago
If we are doing discounted cash flow analysis, apple made about 70 billion in free cash flow. From the balance sheet balance sheet they have about 100 billion in tangible assets. So if we take 1900/x=70 years which would imply a rate of 4% which is reasonable. However how many companies have been on top for 30 years?
The whole market seems insanely overvalued during a pandemic. The entire stock market cap is 1.6x gdp. which is greater than the .com crash. This is one of the things buffet talks about.
https://www.advisorperspectives.com/dshort/updates/2020/08/04/market-cap-to-gdp-an-updated-look-at-the-buffett-valuation-indicator https://www.advisorperspectives.com/dshort/updates/2020/08/0...
- pfortuny 6y agoYes. But during the .com crash, rates were "real" (not like today, when they are just technically greater than 0).
- victor106 6y ago> So if we take 1900/x=70 years which would imply a rate of 4% which is reasonable. How did you get to 4% from the above calculation?
- 317070 6y ago(2000B value - 100B assets) / (70B cashflow) = 27 years investment payback. At this point I think he did 100/27 years=4% interest rate per year. However, that would be for the simple interest case, i.e. not taking into account compounding. However, for the cumulative interest rate, you would normally do ln(2)*100/27 years = 70/27 or a 2.7% YoY interest rate. As a general trick: if you want to convert payback time to cumulative interest rate, use 70 instead of 100. There was a TED talk on the topic iirc.
- drocer88 6y ago"... how many companies have been on top for 30 years?" Looks like General Motors and AT&T were top 2 from 1930 to 1960: https://taaginc.com/large-and-in-charge/ https://taaginc.com/large-and-in-charge/