My work has taught me: valuing a subscription business is similar to valuing a portfolio of annuities, but is in large part a black art requiring good judgement, which comes from observing and participating in a lot of bad judgement. Also: Profits Are an Opinion, Cash Is a Fact.
2/ "A perfect business in terms of the simplicity of valuation would be an annuity; an annuity generates an annual stream of cash that either remains constant or grows at a steady rate every year. Real businesses, even the best ones, are unfortunately not annuities.” Seth Klarman
3/ To assess whether a stock can be purchased at a discount to value investors are forced to be detectives and seek clues about long term future cash flows.
"Most investors avoid the difficulty of forecasting long-term cash flows by ignoring them." http://www.expectationsinvesting.com/pdf/earnings.pdf …
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