DCF and other tools to value companies make sense when the valuation is somewhat stable, but the real world often isn't. MSFT was worth $1T a few years ago beca

DCF and other tools to value companies make sense when the valuation is somewhat stable, but the real world often isn't. MSFT was worth $1T a few years ago because the world presumably expected $1T in profits over the lifetime of the company. But OpenAI came around and suddenly they're worth $2T. It wasn't because their lifetime doubled, it was because most people perceive AI as a major advancement. I believe this is the primary thrust behind the S&P500's 7-10% annualised returns in the last 20 years because most of the gains have come from the top.