James Osborne via Ben Carlson:
If you want to come to me and say “The intrinsic value of this stock is $45 because that is what investors have historically been willing to pay for these earnings so it is a buy at $30,” my simple question is: why isn’t the market willing to pay for those earnings today? Ultimately, intrinsic value is decided by the market. It is an odd bit of dissonance to state that today the market is wrong about a stock’s “intrinsic value” but to expect the market to get things “right” sometime in the future.
HT: Abnormal Returns
