> Do you have a better way of valuing a publicly-traded company?
I do, but it involves time travel. In 1981, Shiller published "Do Stock Prices Move Too Much to be Justified by Subsequent Dividends?" ( https://www.aeaweb.org/aer/top20/71.3.421-436.pdf ) in which he compares index prices to their ten year dividend earnings, ex post. Volatility of prices is high, but the dividend streams are not.
What this suggests is that price tends to react to short term news far more strongly than dividends would suggest is reasonable. What it doesn't tell us is whether the shift in price is diverging from reality, or converging on it.
I do, but it involves time travel. In 1981, Shiller published "Do Stock Prices Move Too Much to be Justified by Subsequent Dividends?" ( https://www.aeaweb.org/aer/top20/71.3.421-436.pdf ) in which he compares index prices to their ten year dividend earnings, ex post. Volatility of prices is high, but the dividend streams are not.
What this suggests is that price tends to react to short term news far more strongly than dividends would suggest is reasonable. What it doesn't tell us is whether the shift in price is diverging from reality, or converging on it.