Numbers and Narratives: A Simple Discounted Cash Flow (DCF) Model for Equity Valuation

Answering both of these posts here, because I don’t want the Mods removing any such comments (Rightfully, however) and then get blamed for ‘getting them removed’.

The ‘model’ isn’t something I fashioned myself out of thin air. It is based on widely known financial theory. I cannot quote a “success rate”, because the model being ‘good’ or ‘bad’ entirely depends on how it is used (That is to say, depends on the insights, financial acumen of the person using it). Someone may use it way, way better than me. In fact, it’s assured that someone will.

Time and again, I have claimed that the model is simply a tool. Say, it’s like a wrench. How silly do you think is asking “What is the success ratio of a wrench?” The wrench itself does not fix stuff wonderfully, the person who handles the wrench does. I really hope I have made myself clear.

Of course, I understand that there’s the chance of the wrench itself being faulty or in this case, my model itself being faulty. I will be more than happy to discuss along these lines. In fact, that is what I have been doing in this thread.

I just think it’s quite silly and impossible to calculate how ‘successful the model was’. If there was any such way, please do let me know.

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