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The Cynic’s Corner: Value versus Price

This might sound like heresy in a book on valuation, but some investments cannot be valued. It is not because too much uncertainty exists, an excuse used by some who choose not to value young or emerging market companies, or because there is not not enough information, because you can always make estimates to fill in the gaps. It is because some investments are not cash flow-generating assets, but are instead commodities, currencies, or collectibles. If you are puzzled about the distinction, we delineate the differences in this chapter, after revisiting a discussion that we started in Chapter 3 about the difference between value and price. We then talk about the choices we have, when called upon to put ...

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