by HUNTER Tue May 31, 2016 8:39 am
Thanks YK for continuing this useful discussion.
Regarding NAV and P/E.....
On logical and mathematical grounds, I totally agree with FG. In fact, my adopted valuation calculations are based on the same principles.
I believe, the value of a share needs to represent both the present value as well as the rate of growth compared to the ongoing opportunity cost (less risky opportunities).
However, when thinking in this line, by observing the market, as I believe, we see lot of 'inefficiencies'. There are some shares, which should value high, logically, trading at lower prices. And other way round also.
May be, it happens because, sometimes the crowds do not act rationally; may be there are other factors crowds 'feel' but mathematics fail to capture, or may be there are 'genuine' hidden 'gems' crowds have failed to identify.
This is one aspect in the market I like to keep on studying.
For the time being, as I have noticed, the market is not immune to all type of common behavior of human we see in any other area. People usually make decisions based on their 'perception'.
Just like good brands are sold at premium prices, it seems, some shares are also traded at premium prices because their 'brand image' is appealing to the majority.
Any idea why some vehicle models manufactured by Dihatsu are sold at a higher price with a Toyota badge, with no physical changes except for just a sticker?
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