CHAPTER 1
Corporate Valuation for Portfolio Investment A Philosophical Framework
EQUITY SHARES must be valued—but how? It may seem that sophisticated financiers have taken over valuation. The phrase “equity valuation” may conjure up visions of financial specialists feeding numbers into algorithmic programs, relentlessly making buy, sell, or hold decisions unrelated to the operating realities of businesses or to understandable economic concepts such as replacement value.1
A great deal of controversy surrounds the mathematicians and physicists (aka “quant jocks”) on Wall Street. Some blame them for the economic problems of the first decade, noting their complex trading programs that, once automated, accelerated doomsday events for markets.2 Others ...
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