True Share Price

[#1]

Can anyone explain how to calculate the TRUE value of a what a share is actually worth?

[prancing_horse]

It's not you and me that give the share a "true" value. The market decides today what the share is worth in the future, in other words, the good news that they are going to make a mint in six months time selling XYZ, will be priced in immediately, and not in six months time.Likewise with bad news, as we've seen the last few days.The trick is to try and beat the market, something not very easy to do as most unit trust fund managers know.An option is to buy the market, ie Top 40. The market often tends to over react both on the up and down side. You call it right you in the money, call it wrong be prepared for a little pain. The present shakeout may give us some good buys, MTN being one.

[Blik]

There are many methods to gaining a "true" value of a share. Buffet, Graham, Simon and Werner all have their methods and I bet they differ slightly. It depends on many factors, and some are risk induced. For example do you consider value in Goodwill? Coke certainly does. But its hard to put an exact value to that. Some people may only look at the cash value per share in their valuation. Have a look at a method that Ben Graham used to select a share on Tickertalk. http://tickertalk.co.za/blog.php?user=FrancoisJou&blogentry_id=2801.

[richardw]

Checkout the DDM and Gordon Growth Model:
http://www.investopedia.com/terms/d/ddm.asp

This model works for dividend-paying companies, and it's pretty solid stuff for valuing a company as if you owned part of it. If companies don't pay a dividend, you're relying on them using their retained earnings to grow the value of the business more than just paying you out the profit.

[john_1]

just read the ticker.. it only has one value and that is its price!

[#6]

How do i work out the discount rate?

[#7]

How do i work out the discount rate?

[richardw]

Click on the 'Discount Rate' link a few centimeters down the page :)

[geordie1]

nav available on line-it is meant to be value of share if you take aasets less liabilities-no future taken into account

[richardw]

Just read around the site. Here's another good starting point:
http://www.investopedia.com/university/fundamentalanalysis/fundanalysis9.asp

There are also many books on the subject and variations on the concepts used - cash flow vs dividends etc. Note that this emphasizes finding your own value for a company and ignoring what the market thinks it's worth at this exact moment. The only true value is what value it has for you.