For Apple it is whether they can stay a prominent platform that can capture a significant portion of the value created on it.
For Tesla it is how fast their self driving tech will evolve.
For Google it is whether AI will make search obsolete or more valuable.
Everything that Buffet says falls into one of two categories: [1] He has no relevant knowledge. [2] He/Berkshire makes money from it.
[2] Is the most common. (His railways transport oil. His insurance companies make money from the inheritance tax, a tax that his estate won't pay. Etc.)
> His insurance companies make money from the inheritance tax
There are lots of investments that are way more boring than Apple, Tesla, and Google, and that should be analyzed with DCF.
DCF is more for slow and steadily growing companies that might be undervalued for just a moment because of factors outside of the company's control.
Tech companies can be harder to value via DCF, because as you say, there are monumental factors that outweigh historical cash flow trends.
This is part of why Warren Buffet historically avoided tech. It is wildly unpredictable from a pure historical cash flow numbers standpoint.
DCF is not a crystal ball.
The types of questions you're talking about aren't well analyzed by DCF.
But something like the fair value of Walmart can absolutely be determined via DCF.
You expect that investing in all of the companies in the upper half of the list will result in a better long-term return than investing in the lower half of the list?
This is THE way fundamental analysis is done. There are many ways to model - but this is the most robust as you have the most inputs.
Maybe people just have no idea how “fundamental analysis” works or even what it means?
This is how it works. That doesn’t mean you’re going to beat the market, or even make a positive return. But it’s essentially the basic fundamental analysis model.
- price (absolute level)
- price movements (relative change)
Your claim is that an equity's price isn't usually a reflection of fundamental value.
On how many days this year (or this decade) was Google's market cap lower than that of Cheesecake Factory? Why?
AIUI Rentec holds positions for minutes or days (or maybe even weeks?), not seconds or less.
My general point still stands.