Despite what we think we know about valuation and how stocks behave, the real world often does not follow the same logic. Markets tend to be irrational and what takes place are mostly driven by the actions and responses of humans. Knowing how to tell this difference is probably one of the most underrated and unspoken skill in this business.

Deriving an accurate discount rate is a fool's errand. Value sits with the beholder of cash, who are you to say otherwise?

No amount of number crunching and analysis allow for an accurate appraisal of any company's fair value today, primarily because the free market is no longer free. Markets today are to a good extent, influenced by statecraft, driven by the common interests of various governments.

There are no formulas for the correct cost of capital. There are only astute decision makers and those who are afraid to get caught on the wrong side of the outcome.

Without connecting the numbers to a story, projecting cash flows simply becomes an emotionless exercise of numbers.

Too many folks who hail from the 'old' system in investment banks continue to quiz junior bankers on discount rates...