To set the table for the comparison, let me start with an assessment of the differences between the valuation and pricing processes. The value of a business is determined by the magnitude of its cash flows, the risk/uncertainty of these cash flows, and the expected level and efficiency of the growth that the business will deliver. The price of a traded asset (stock) is set by demand and supply, and while the value of the business may be one input into the process, it is one of many forces, and it may not even be the dominant force. The push and pull of the market (momentums, fads, and other
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