OldLimey

Mark Fisher: Analysis Doesn't Matter in This Market

Could you please explain how you would set about arriving at a meaningful liquidation value for, say, Boeing? (Note that I didn't show a perverse sense of humour by asking you to place a liquidation value on any of the banks.)


On Feb 22 10:54 AM Jolly_Rancher wrote:

> Value analysis works well in this market. Value investors value
> stocks based mostly on one of two criteria: 1) NPV of furture cash
> flows plus salvage value; OR 2) Liquidation asset value. The problem
> with using NPV is that cash flow estimates are plummeting fast. High
> government and consumer debt levels and low income/job prospects
> make future cash flows predictions somewhat somber. That leaves liquidation
> of assets as the more likely method today, and looks like what the
> market is increasingly understanding. It's taking companies' share
> prices down to liquidation value. The problem with this is that all
> of the assets can't be liquidated at once. So I expect at some point
> in the next few months, should this economy not improve, to have
> NO BIDS and so no trade on many stocks. Value analysis works well,
> but when asset prices are falling so dramatically, you need to be
> on top of the game. Using the NPV Excel function with recent cash
> flows from company quarterly reports will burn you.