His entire philosophy is the market is only imperfectly efficient, so prices may or may not reflect actual value. Determining actual value is an estimation proc

His entire philosophy is the market is only imperfectly efficient, so prices may or may not reflect actual value. Determining actual value is an estimation process, so he works very hard to avoid bias. An example is he comes across a company with an excellent business model, that he would like to own. If he knows it’s trading at $10, when he does his DCF analysis he will need a valuation over $15. When he makes key DCF assumptions (growth rate, profitability, margins, lifetime of competitive barriers, etc) he is also subconsciously rooting for that > $15 result. It’s too easy to say, well normally I don’t think growth rates this high can last that long, but in this case the company is unique and special, so I’ll give it higher growth prospects than I usually find prudent, etc. Go read his shareholder letters, you can find them back to the mid-70s online (and Buffett partnership letters back to mid 50s), and he often discusses his efforts to avoid bias (sunk cost fallacy, Mr. Markets influence, etc).