what approach does Benjamin Graham used to value a stock ?
What other methods beside DCF can we use to find out the intrinsic value of stock?

Question

anonymous · Answer

Ben Graham used a variation of the dividend discount model, with constraints for safety and a strong balance sheet. (He liked firms with little debt and lots of cash)

anonymous · Answer

In todays scenario, what would be the best method to value a stock.
Actually i am doing a project to find intrinsic value of a stock and i did DCF model. But my guide just rejected the model saying that it only look good theoretically, it does not have practical implication as almost everything is based on forecasting. He asked me to first do it my self and gave hint that said do what Graham does..
So could you plz help me out on this .
Thank You.

anonymous · Answer

Your guide is full of it. Businesses have always been bought and sold based on cash flows...

anonymous · Answer

Maybe your guide meant that you have not considered some cash flows that occur in practical business?

anonymous · Answer

well you may try reverse DCF. I mean we predict cashflow for future and reach to intrinsic value right. now go back in past and do your dcf valuation as you are in present and relate your results with current financial year. it will give you better idea which assumptions are valid and which are not.