Even if markets were perfectly efficient (which they are not), it would not be very smart to use WACC because, as you guys pointed out above, it uses beta in the calculation. In other words, in order to figure out the cost of equity we would have to use CAPM, which is just a bunch of nonsense. Anybody who truly believe that beta is a measure of risk is either crazy or an academic. True risk cannot be calculated even though it would be ver helpful if we could do it.
Contrary to what most people learn in business school, the discount rate should always be your minimum required return (which should be higher than the cost of debt if the company has any). Buffett's minimum required return is 15% and that is what he uses as an approximate discount rate. I am even more conservative, my discount rate is 20%. In other words, I need a long-term return of about 20% per annum in order to be satisfied. Doing it this way is simple and you don't have to mess around with giving each individual company its own discount rate.
Netflix Is A Fragile House Of Cards [View article]
There is a ton of competition in this industry. Another problem is all the free websites that offer the same content as Netflix (and even more). These websites are very popular among young adults. In my opinion, its these free websites that will be the biggest long-term problem for Netflix.
An 11% earnings yield is attractive even if we see no growth. This stock is cheap no matter how you look at it! Growth would just be icing on the cake.
My formula is good because its simple. No precision required (unlike a DCF model). Precision is simply not possible contrary to what most academics believe. It gives you an "approximate" answer. If you use a large margin of safety you will do very well over the long run. Also, unlike most models, it takes into account a company's capital structure. That's why a company with a low P/E can be expensive even if it has a high growth rate.
Why P/E Doesn't Mean Netflix Is Overpriced [View article]
Everything offered on Netflix (and much more) can be found for free online. Everything! Younger generations are too smart to pay for things they can get for free.
The Next 'Greatest Trade Ever' The Market Is Completely Ignoring [View article]
True, but if students cannot pay them back, what happens then? Is the government going to put them all in prison? Probably not! It really does not take a genius to see that there will be huge problems here.
Why P/E Doesn't Mean Netflix Is Overpriced [View article]
Most of the people I know that have a Netflix subscription use the free trial. They also share their account information with family and friends. Furthermore, once their free trial ends they start another free trial using a different credit card, name, etc... Even if Netflix did have 100 million subscribers, a large number of them would never be paying customers. In other words, Netflix will never bee as profitable as people might think.
The Next 'Greatest Trade Ever' The Market Is Completely Ignoring [View article]
That's why you place small bets (using options) and continue placing them until the eventual crash. Traditional shorting is dangerous and should never be done, in my opinion. Options give me more leverage and minimize my potential losses. When shorting the most I can make is 100% (actually less when subtracting dividends and interest), but if the trade goes against me I can go bankrupt. This never made sense to me. Minimizing losses should always be the #1 priority. All investing is speculating. The intelligent investor/speculator only places a bet when the odds are in his favor.
Workday: Overvaluation And Lock-Up Expiration Will Cause Shares To Crash [View article]
Quad/Graphics: 15%+ FCF Yield [View article]
Netflix Is A Fragile House Of Cards [View article]
Make sure you have adblock to block the ads. Click "continue as free user." Then click "play." That's it!
Quad/Graphics: 15%+ FCF Yield [View article]
Netflix Is A Fragile House Of Cards [View article]
http://www.1channel.ch
http://www.solarmovie.so
http://bit.ly/ZUhlHs
You must learn how to use the websites. Once you do it should be easy finding any movie you want to see.
Netflix Is A Fragile House Of Cards [View article]
Netflix Is A Fragile House Of Cards [View article]
Apple Is Significantly Undervalued [View article]
Apple Is Significantly Undervalued [View article]
Why P/E Doesn't Mean Netflix Is Overpriced [View article]
The Next 'Greatest Trade Ever' The Market Is Completely Ignoring [View article]
Why P/E Doesn't Mean Netflix Is Overpriced [View article]
The Next 'Greatest Trade Ever' The Market Is Completely Ignoring [View article]
Apple Does Not Have $137 Billion In Cash [View article]
Apple Does Not Have $137 Billion In Cash [View article]