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  DELL can yield 16% compounded long term
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cwoffspr...@gmail.com  
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(2 users)  More options Feb 2 2007, 1:04 pm
From: cwoffspr...@gmail.com
Date: Fri, 02 Feb 2007 10:04:41 -0800
Local: Fri, Feb 2 2007 1:04 pm
Subject: DELL can yield 16% compounded long term
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michae...@gmail.com  
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(1 user)  More options Feb 2 2007, 1:53 pm
From: michae...@gmail.com
Date: Fri, 02 Feb 2007 10:53:37 -0800
Local: Fri, Feb 2 2007 1:53 pm
Subject: Re: DELL can yield 16% compounded long term
For a site that lists Warren Buffet as an inspiration, their math sure
is lousy.

The EPS is listed as $1.17, which translates to roughly a share price
value of $17 using discounted cash flow:
http://www.moneychimp.com/articles/valuation/dcf.htm

DCF is a favorite tool of Buffet and Graham. You don't apply the 12%
growth rate to the stock, you apply the growth rate to the earnings;
if the stock goes up it is because people are happy with the EPS going
up. The EPS at 12% will be 2.06.

If, as an investor, all you really want is 16% per year (and not 16%
in five years, which is much more likely with Dell), just put your
money into BRK.B instead.


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