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Tony Willingham

This article made me laugh, and not much does that.
This is your first investment blog. Do you still believe it’s conclusions?

Tony Willingham

How does one determine honesty in a company?

Yuval Taylor

I've swung back and forth a lot on the value hypothesis, and now I believe in it. How else can you explain the fact that one company has a market cap of $100 billion and another has a market cap of $30 million? I'm working on an article about this at the moment, but to be brief, the mathematics of net present value implies that an estimation of future growth is of supreme importance to determining it. If Tesla's market cap is twelve times that of Ford's, that means that investors believe that at some point Tesla will make twelve times as much money as Ford. That may sound like a fairy tale if you look at today's sales and earnings, but it's not entirely implausible if you imagine a future in which the internal combustion engine is extinct. As for determining honesty in a company, you can look at earnings quality. The Beneish M-Score is a collection of measures that try to measure company honesty in one way or another. See https://www.valuesignals.com/Glossary/Details/Beneish_M_Score

Yuval Taylor

But despite my newfound belief in the value hypothesis, I continue to assign price a relatively low importance in my investment practice. Less than 25% by weight of the factors I take into account when deciding to buy/sell a stock have price as a component.

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