Make money doing the work you believe in
Aesop understood DCF models 2,500 years ago - "A bird in the hand is worth two in the bush."
Three questions embedded in that fable:
How certain are you there are birds in the bush?
When will they emerge and how many?
What's the risk-free rate for discounting those future birds to today?
Every valuation method - multiples, comps, sum-of-the-parts - is just a different way of answering Aesop's questions. Some methods just hide their assumptions better than others.
Multiples assume the birds in the bush are worth exactly what similar birds sold for last week.
DCF models try to count the actual birds and estimate when they'll fly out.
Both approaches can work. The investor just has to be honest about which birds they're counting.
The fable endures because the trade-off is timeless: certainty today versus possibility tomorrow.
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