Explaining LCRT's Conceptual Framework in Detail
Section IV covers a series of chapters to explain LCRT's conceptual framework in more detail.
||Focusing on Price Formation
||Our Automated DCF Model—The Better Model
||Getting to Know Our LCRT Model
||Digging Deeper into the LCRT Model
||Putting Our Valuation Proposition into Perspective
Chapter 12: Our Approach
1. Focus on cash flow, not earnings.
2. Terminal values are extraordinarily sensitive to input assumptions. Empirically test their structure with historical data to assure that they are unbiased and accurate.
3. The foundation is intrinsic valuation derived from automated discounted cash flow to estimate where price is likely to head in a price formation process.
4. Price change momentum fails to analyze the fundamentals.
Chapter 13: Focusing on Price Formation
1. It's all about money. Businesses need cash to compensate the owners, managers, employees, and consultants; pay for supplies, equipment, facilities, and support; meet tax obligations; invest in research, new products, production, marketing; and hire more people to grow.
2. Our models are designed to select stocks based on fundamentals, not market behavior, mainly overreaction focused on earnings. There always will be room for continuing improvement. Valuing a company never will be a perfect process.
3. Cash-loving true contrarians are willing to bet against ...