Do you want to learn how to manage your own investments? Are you ready to stop paying investment management fees and start building wealth? The DIY Investing Podcast is dedicated to providing you with the knowledge, skills, and resources you need to be a better investor. Learn how to make investment… read more
This episode was inspired by a Twitter thread where I responded to a poll on how to value companies. That thread is available at the following link:
https://twitter.com/TreyHenninger/status/1288475399861817352
Mental Models discussed in this podcast:If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.
Follow me on Twitter and YouTubeTwitter Handle: @TreyHenninger
YouTube Channel: DIY Investing
Support the Podcast on PatreonThis is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron.
You can find out more information by listening to episode 11 of this podcast.
Show OutlineThe full show notes for this episode are available at https://www.diyinvesting.org/Episode87
Summary:Growth is not free for most companies. It costs something. The cost of growth valuation model takes into account return on invested capital when valuing stocks. Most companies have to retain earnings in order to grow.
Assets are only as valuable as the earnings they create. You can't take credit for both book value (assets) and earnings power in the same valuation on a stock. It's a problem of double counting that leads to overvaluation.
Educational
Interesting
Funny
Agree
Love
Wow
Connect with listeners
Podcasters use the RadioPublic listener relationship platform to build lasting connections with fans
Yes, let's begin connectingFind new listeners
Understand your audience
Engage your fanbase
Make money