Price vs. Value and/or Pricing vs. Valuation

A rather interesting discussion by NYU professor Aswath Damodaran on Valuation.  Yeah, yeah – I know…Another value investing guy who talks about intrinsic value and discounted cash flows, but the conversation brings up some interesting ideas:

  1.  Are valuations completed by sell side analysts (analysts at institutions selling you something), or perhaps some buy side institutions as well, actually masking simplicity with seeming complexity by placing a  multiple on price (As noted, think about how Real Estate Agents come up with the “Price” of a property)?
  2. If something has no future cash flow, can it be valued?  More importantly, does it even have value?
  3. Which do you wish to play; the long run value game or the short run price game?
  4.  Uncertainty exists, don’t shy away from accepting this and estimate…Does finding the distribution of outcomes yield the answer, relative to the percentile the “Price” sits currently?
  5.  Number Crunches vs. Storytellers, should it be one or the other?  Why not fuse the two?
  6.  Luck vs. Skill (I will add some posts by Michael Mauboussin in this topic soon), why do investors seemingly pay so much for luck (i.e. Hedge Funds)?