Value is more than a number …
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The choice of a discount rate to assess the value of an asset is a challenge for every investor. It is the crucial prerequisite to deciding whether or not an asset should be bought, and is used in conjunction with a reasonable assessment of the likely, sustainable earnings flow at the current price.
In an adaptation from his upcoming shareholder letter, the Oracle of Omaha explains why equities almost always beat the alternatives over time.
Having spent the Christmas period being teased by my teenage kids that I was old, past it and too tight on pocket money, it was a welcome relief to get back to the office - only to endure much of the same! It did remind me however that I had just passed an important milestone, my 25th year as an investment manager; time for panic or perhaps a bit of reflection.
