58- Company Valuation Methods

(upbeat music) Hey everybody, this is Phil Town. - This is Danielle Town. - We're here for the invested podcast. It's the time for all of us to discuss how to be invested. - In our lives, in our money, in our thought processes, in our emotions, in our awareness. How much more abstract can I make this? (laughing) - Really what we're trying to find out is, what stock should I buy? (laughing) - Yeah. - But we have made it into this enormous conversation of abstraction. - We're cracking each other up because Charlie Munger said, it's totally easy. You know, what would they have to talk about the rest of the semester if they taught this way of investing to everybody? Charlie Munger being Warren Buffett's partner at Berkshire and a brilliant investor. He said, "You just be capable of understanding the business. "You just make sure it's got a durable, "competitive advantage that's intrinsic to the business. "Make sure it's got management that have integrity and talent. "And you know, you can't pay an infinite price "you'll buy it at a fair of price "with a margin of safety." - Yeah, no big deal. - All the research. - I mean, NBT. (laughing) - And it turns out that it can take a long time to unwrap those four things. And those who don't unwrap them fail to do so that they're peril because if you get one of those wrong, given the other criteria for great investing, which is to focus rather than diversify or what they would say over-diversify. - For value investing. - For value investing, then you're gonna be in trouble. Because we're gonna only buy maybe 20 companies in our lifetime, we're gonna focus on keeping the portfolio size to something around 10-ish up to 20. Because we simply don't have time to learn about enough of these companies to have more than that. - I mean, we barely have time to learn about any companies. Let's be real. So yeah, we're trying to figure out how I am trying to figure out how on earth to do all of this without it turning into the world's biggest project in a full-time job. And clearly, it's not as easy as Charlie makes it sound. So the right answer lies somewhere in the middle. Charlie's right, that it is actually really simple. It requires, however, an iron discipline to not do stuff most of the time, to not invest most of the time. And that's really, really hard for people to understand. You know, our. - It's hard because it feels like you're not accomplishing anything. It feels like you set out with your time. And by the way, we are going to talk about valuation today. We are not going to talk about anything else. I promised everybody that we would get to valuation and we will. - So we're not going to talk about anything else except this. - Except this. That's what I mean. I'm so glad that you understand exactly what I mean. But we have to find the sweet spot of how much time you can spend and feeling like that time creates results. I mean, somebody who just looks at companies, let's say they look at companies all day long, but never buy one. What's the point of that? No, we've got a buy one eventually. - Well, I'm really happy with that person. They look at companies all day long, or they look at companies 15 minutes a day, or they look at companies an hour a week, or whatever time they have. But they do it as a discipline in life. They're invested in this process, and they're going to stay with it, regardless of whether it's 15 minutes a week, or 15 hours a week. Obviously. - Well, that's a good point. That's the practice that we're talking about all the time. And that's what I've been trying to do, is just start it in my own life as a practice, and not put that pressure on myself to buy something, because I'm completely intimidated by the idea of actually buying something. - Yeah, and this is why we talk. I like your idea that it's a practice, in the sense of a yoga practice or a meditation practice, because there's no end to it, and there's no perfection. There's no final moment where you've got it. It is a cumulative process, and the key to it is the discipline of the practice. It's cumulative in the sense that everything you learn, you know, the person that's reading about companies all day long is accumulating more information, than somebody that does it for 15 minutes, but they're both accumulating, and over time, that little snowball turns into a gigantic avalanche. In fact, one of the biographies on Warren Buffett is called snowball, for two reasons, actually. One is that this little thing that you start down the mountain accumulates more and more knowledge, so that as it gets rolling after a few years, you really do have a lot of information, even if you just start with a very little amount of time in the practice. A lot of information happens because you're focusing on a very small number of industries, a very small part of the market, as part of that practice. And second metaphor about the snowball is that it is about accumulating wealth slowly but surely through a process called compounding growth rates, which have an enormous impact on you down the road, and very difficult to see the impact in it as the snowball starts down the mountain, but boy, by the time it really gets rolling, it's very easy to see the impact. And this impact of compounded growth rates is either working for you in your life in terms of building up wealth more and more rapidly, or it works against you as you spend wealth through credit cards and compounded rates of return and the interest rates that you pay. So I am 100% good with the idea that you just do it a little bit at a time and you try very hard to apply the discipline of not expecting to buy anything right away, of just being cool with it. - I'm with you, yeah, I think, but I think it's both. And you just made two points that illustrate how it's both. So the first thing you said was focus. Focus on a certain, let's say one industry, and then a certain number of companies within that industry, or maybe if you're expanding your focus lately, a couple of industries and then the companies within those industries. But you're focusing your time, you're focusing your attention and most importantly focusing your knowledge. And by doing that, it's all coming in, I mean, I'm in like making a sort of triangle of vision in my mind of like how to bring it down to one point. And then the other thing you said was compounding, which is you have to buy something in order for things to compound, right? So both things are true. You're focusing in the sense of you're not buying anything, you're doing your research, you're moving along with your practice. And the other side eventually you buy something because that is also the point. It's like there's a goal, but there's no goal. There's no goal, but there's a goal. There's a point, but there's an expansion. There's an expansion, but there's a point. It's all together simultaneously. - Oh my gosh, we're channeling somebody here. I don't know, but it's pretty good. - How come you know it's true? You know it's true and you just said it. You're just, okay, but I don't want to get it so esoteric and out there in the weeds that you just feel like, oh, you know, I don't want to feel like that. I want to feel like, okay, I'm doing something really practical here. And what? - Which we are. I mean compounding, how much more practical can you get? - But compounding works against you as well. And so if you are sitting there with nothing and you own no companies and your cash is just sitting there, that's a far better place for it to be than in something that goes down like a brick because you jumped the gun, because you got nervous about not doing anything. So you don't want to compounding against you. In fact, Warren Buffett makes a very strong case that there's only two rules of investing. Rule number one, don't lose money and rule number two, don't forget rule number one. And that's right to that point of not doing something until you're very certain that you're doing the right thing. Because if you take your portfolio down 50% by having a mistake, it has to go up 100% to break even. That's a gigantic-- - That's a terrifying number. - That's a huge number. You imagine compounding your money at 100%. I mean, if you're making 15% of your, you're doing great, which means if you lose 50% and then you do great for the next five years, you break even. Which is horrifying. So this is what kills people's desire to be part of this practice. Is there-- when you start to realize what's involved here in terms of your retirement, in terms of your ability to have money, you start to realize how serious this is. And many people choose to give their money to someone who cannot invest it at a decent rate of return as opposed to taking this on personally themselves because it's so intimidating for them. - Exactly, that's what we were talking about last time. The emotions of it all overwhelms the practicalities and even the desire to be involved. Because it's just too much. It's too hard, it's too much, it's too overwhelming. It seems like too much time. - And yet-- - And yet-- - I get all of that. I get all of it. I am that person. - Then, and yet, Charlie's right. It's dead simple. But it requires patience. And that means that you must recognize that if it's difficult to find a wonderful company on sale, it's because Because the market is in a place where it's priced in all of the value of the businesses. In other words, the market, according to the founder of value investing, BINGRAM, the market simply fluctuates. It moves up and down. If you're in a cycle where the market is up, then it's going to be really time consuming, difficult, really requires a lot of skill to find a really great business at Zon Sale. Because that means that all of the thousands of superstar investors that are out there looking for a business at Zon Sale have somehow overlooked this one that you, high school teacher who runs the gym club, you found it, not the Wharton guys, but you did. That just doesn't happen very often. It can happen, but it doesn't happen very often. We talk a lot about events that make that actually possible in any market. In general, the smart way to think about this is that the market is going to fluctuate. If it is in a time like, I believe it is right now, where it's fully priced up, everything is pretty much at its value or even at well above its value because of actions coming in from around the world, governments trying to prop up their economies, trying to keep employment high, trying to reduce unemployment. All of those things create a lot of pressure on prices to go up. Usually there's multiple choices for people to put their money into. They can buy bonds. They can lend money to the government in buy bonds or a corporation in buy bonds or they can put money in stocks. The trouble is right now, the bonds don't pay anything and everybody's being driven into stocks and you're being heard into stocks. No question about it to support the growth of businesses, to support the value of 401K retirement accounts, all of which encourage people to keep voting for the politicians that are there doing this and which try to encourage the growth of employment. Oh my god, it's the worst. It's all the worst. No, I'm not saying it's wrong. I'm just saying it is. Okay. So tell me this then. Let's say that I have a market that is not the stock market. It's a little market, a little main street and it involves exactly one business and it's called the lemonade stand. Ah, beautiful. How on earth would I ever value that lemonade stand? Okay. You took us cleverly back to the point of today's. I don't know what you're talking about. Then let me go through it. Alright, we have been trying to do this lemonade stand for weeks. So let's. We have been doing this lemonade stand for weeks. Let's not sell ourselves short here. We have been doing this lemonade stand for weeks and everyone has been following along very valiantly because listening to numbers I think is one of the least fun things to do in life. But we have to do it and so we're doing it. So where we are is that we discuss the. I can't remember what the first one was called. What was the first kind of valuation called? We just called it the margin of safety analysis. But we did another one before that that was kind of like real estate analysis. Oh, we call that the 10 cap. Oh, the 10 cap analysis. Okay. So we've done the 10 cap analysis. Oh, well then. Thank you. Go ahead. We have done the margin of safety analysis. And I think we ended a few podcasts ago before we got mildly sidetracked with our fascinating discussions about life with saying that we were going to wrap up margin of safety, right? Yeah, we really have kind of like four ways to go at value. And there's. You know, their entire probably focuses in business school on valuation. But we're not trying to be superheroes of valuation. We're going to recognize that there's a lot of difficult valuation problems that we can't solve and would have to go to an expert in valuation who really studied it for many, many years. What we're trying to do is just value companies that are reasonably easy to figure out. And we're going to look at it four different ways. I'm going to go through those again with you today just quickly. Well, we've only gone through two so far. Yeah, so we're going to get to the other two. Okay. We've got three cap here. The easiest one of all we call the 10 cap. And that is similar to what we would look at it with a piece of real estate that is let's say a suboptimal piece of real estate or a farm that's producing cash to us that we put in our pocket. And the amount of cash, let's say, is a hundred bucks. And we can value that real easily. We're just saying, okay, well, I will be willing to receive from the purchase price of this business a 10% return. And so that 10% return is what that hundred dollars is. So the hundred dollars must be a 10% return or better. So I know how much I'm getting. I'm getting the hundred bucks. Now the question is how much am I investing to get a 10% return from a hundred dollars? How much will I pay? How much will I pay? 10% And the answer would be 10% divided into 100, which is 1000. And now I know what price I'm willing to pay under the 10 cap valuation. I'm willing to pay a thousand dollars to get 100 dollars of return into my pocket. Now that return is free cash flow or without getting too crazy about it, let's just remember that there's multiple ways of looking at things. One of the ways that Warren Buffett looks at it, he calls owner cash flow, which is pretty close to free cash flow. And in our lemonade stand, they're going to be about the same. So we're going to say that the money we put in our pocket. And that's what we called it. That's why I was a little confused. We called it the free cash flow analysis before. Well, we did a free cash flow analysis and then we used that in order to come up with a value. I see. So in our lemonade stand, our free cash flow turned out to be eight dollars this year. It's been growing and we have it at eight dollars. So if we know we're going to get eight dollars from the lemonade stand on a per share basis, we simply divide the eight dollars by 10% and we get a 10 cap valuation of 80 bucks per share. So we would be happy to pay for this about 80 dollars per share. Now the one difference between our real estate deal or our farm deal and the lemonade stand is that the lemonade stands doing great. It's growing along at 13% a year. It is not suboptimal. It doesn't need paint. It doesn't need the lawn mode. It doesn't need better farming practices. It's already running really good. So why would we say the 10 cap would apply to a well run business since you can't fix it up. And the answer is that because we know it's growing. It's a well run business. It's growing at a nice clip above 10% per year rate of growth. And because it is, it's like a real estate deal where when you trim the hedges and paint the building, you can raise the rent and you can grow the rent at a certain rate per year. So typically real estate rents don't grow very fast, you know, one or two or three percent a year. This business is growing at 13% a year. So. Okay. So normally you would use this valuation method for a suboptimal kind of business, the kind of business you buy and then you're going to fix up. Yeah. But like an old house or something. Yeah. But it's fixed this up. What I have for this one is for an optimal business, not a suboptimal business, but an optimal bit. A beautiful lemonade stand with everything perfect. We can use this method of valuation because we are projecting that it's going to continue to grow reliably as it has in the past. Very good. Absolutely right. We can also look at this in terms of a company that's going through some kind of a crisis, you know, like the banks all went through a crisis in 2009. You could look at their earnings and say, wow, their earnings are negative or their earnings are almost nothing and try to. That's a suboptimal to me. It is suboptimal. So you would sort of skip over the current level of earnings and just look at where they're going to be when they get fixed back up, just like a farm or a piece of real estate. So that's the 10 cap, really simple, really, really simple and will provide you with a very high bar to finding a good business. So I'm going to tell you right now it would be very hard to find good businesses with a 10 cap. It's going to be tough. I love how the answer. You're like, okay, so that one basically you're not going to find anything. So now I'm going to give you another method that will provide you with less good businesses. Let's continue. Thank you very much for that. That's really a really unfortunately. It's a very unfortunate way to say it. I feel like it's such a classic math class answer. This is why I didn't like math when I was in high school. It was like, okay, so now I just explained everything to you. But now I'm going to change it all. Well, let me tell you what you should do with our business. If we found a business and we really like it and we see that we, you know, we should try to buy this for about $80 today. But we can't because it's selling for 160 or 190 or whatever. Okay, but that means, you know, it goes on the watch list and we wait for the market to fluctuate. Ultimately, Mr. Market is going to come off of this, you know, this euphoric state of everything is always going to go up and it's going to come down. And when it does, this is going to go on sale. So you want to know what to pay for it. You want to have done your homework. And then you want to go on sale. want to load up the truck when it does provide you with that 10 cap. So that's how you do that one. All right. Next one is the lemonade stand margin of safety analysis, which is more of a classic business analysis that says we know what the earnings are. And the earnings in this case are $11. And again, we'll put these numbers up on the website so you can look at them and just see them in black and white. Yeah, and I'm going to put together a whole summary of this whole thing once we finally finished it as well. Okay. So there's four things we need to know that are just simply numbers in order to figure out what we call the sticker price of the business or really the intrinsic value or what the business is worth as a business to somebody who'd want to buy it. Right. And we start with the earnings, which are just the latest earnings adjusted for anything that happened that's stupid in short term. Okay. So earnings could be sky high or they could be deeply down or whatever. As long as you know, it's really short term. You adjust the earnings to a reasonable number that they should have had. And then you add the growth rate, which in our lemonade stand, we got $11 of earnings and earnings are growing historically at 13%. The growth rate isn't given to you anywhere. Earnings are given to you. That's a fact. But the growth rate is something you have to step back a bit and look at. And that's where we went at the four growth rates with sales growth and book value growth and earnings growth and cash growth. And we just kind of look to get an idea of something we feel is very long term, capable of the business to do long term. And that's why we really want to look far out in the future and make sure we're finding a number here that's, you know, real doable by this business. It's done it in the past that can do in the future. For that, one of the critical things is to make sure that the industry can support this business continuing to grow. So the lemonade stands really simple because lemonade, you know, we have a fairly small business and they can grow gigantic and never soak up the business for lemonade. But other businesses could already be quite large. Apple computer is currently valued at $500 billion and it has tremendous size of revenue, tremendous market share. How big can it grow? So you're saying like when you look back at Apple's growth, it could be whatever it is. I don't know. It's 20%. Like really, really good. For years and years and years in your saying, I don't know if it can continue that. Yep. You have to kind of size it into its market and make sure that you feel like there's a big enough market here for this thing to continue to grow at the growth rate that you're stipulating. So at 20 let's say Apple was growing at 26% per year for many, many years, that would mean every three years it would double its size of earnings and revenue. So you have to look at that and say, wow. In eight years Apple will have all the money in the world. Yeah. I'm sure there are some people out there who think that they will. I mean, it's hilarious how out of control this can get in good investors. And by the way, you know, Prem Watzas said this about investing, I think, and that is he's like the Warren Buffett of Canada. He said, the biggest mistake you can make is to think that those people out there at Wall Street know more than you do. They make emotional mistakes all the time. And one of the famous ones was Yahoo was valued at a point where within about 10 to 15 years of the date that it was a value was put on it by Mr. Market, that company would have to have all of the revenue of the United States being spent on every single good and services would have to be spent on Yahoo. In order to justify that price, that would be too high at that point. So you say, well, okay, well, that's probably not going to happen. Okay. So basically you're supposed to run through this analysis and then say, wait a second, is this literally possible? Which requires you capable of understanding the business that you're in. That's just simple. And some perspective, right? So we're using a 13% growth rate, which means it's going to double the size of the business every six years or so. And that doesn't seem unreasonable at all for the limited business. And then we're going to use a PE and this is just a multiple of the earnings we've talked about this at length. And we're going to use a 20 PE here because that's historically what the sort of high end PE is. And finally, we're going to require a return every year of 15%, which is how we're going to ultimately value the business. So first thing we're going to do is we're going to take those numbers and we're going to grow earnings into the future at 13% per year. And that's just simply a little Excel formula that you can look up called FV equals FV. And you put in the stuff it requires, which would mean you start with earnings at 11, you grow them at 13% and you do so for 10 years. We're using 10 years very specifically here for a reason. And that is that we want to get far enough out there that we really are forcing ourselves to look deep at the long term of this business. And second, that it gives us some nice numbers to work off easily. So the 10 year 11 dollar earnings grows in 10 years to be $37 at 13% a year. And then we just want to make a note that when we discuss this last time, we just rounded that up to $40 for easiness. That's where we got the 200. Okay, all right. So I'm coming back because we originally, I think I think we have 38 actually because again, you were just kind of doing back at the envelope calculations. And then you just rounded up to Ford. I just want everyone to be clear if they're looking back at their notes, why their notes say $40. All right. Cool. So if we do $37 multiplied by a 20 PE, we get $746. If we do $40 multiplied by 20, we get 800. So that's where those two numbers are coming from. So we're ballparking its windage, right? I mean, it's just like you're just trying to, you don't have a wind barometer. You're just sticking your finger in the air trying to feel where the wind's coming from here. Wait, what? Did you say it's a windage? It's not, it's not. It's not. It's not a word. Yeah. It's a windage. Yeah, it's a windage. So it's a shooting term. It's a windage. It's a noun. It's a noun. It's windage. It's a thing. It's a thing. Yeah. It's stop it. Yeah, it's where the, it's used in shooting terms. It's like where the bullet's going to drift to because the wind is blowing. Oh, would you say like how's the windage today? That windage really messed with my shot. It did. You'd say exactly that. That windage. Love it. I'm probably going to get emails from shooters going you moron. The wind messed with my shot. I don't know why you use that perfectly good word that already exists, but I really enjoy windage instead. What can I say? What can I say? If you're shooting a thousand yards at a little tiny target, the windage is going to mess with you. Trust me. So we're just making a rough approximation here that gets us in the ballpark so we can get an idea of value. It's an idea of value and we're going to apply a big margin of safety because our idea of value could be off a bit. So here we have one view is 746 for trying to be perfectionist and we're rounding it. We end up with 800. Okay, fine. Now the sticker, in other words, the 746 or 800 dollars is the future value of that company. If our growth rate is right in the future, if in fact we grow it at 11 from 11 dollars on, if we're using the correct PE. So there's a lot of things that can be off here. Okay, so you used 37 dollars and from there you got that you would that we would have 746 dollars per share in 10 years. That's what that means, right? A value of what it's worth of intrinsic value. Yeah, what's somebody in 10 years? Now we are going to require 15% a year. So if we know that we need 15% a year and we know that we're going to sell it for 746 dollars in 10 years, then we know what we should start with. And so that is a simple calculation. In fact, it just works out that if you divide 746 dollars by four, you'll get 186 dollars roughly. And that 186 dollars is what you should pay for this business. If in 10 years you're going to sell it for 746 because if you buy it for 186 dollars and 10 years later you sell it for a 746, you will make 15% per year compounded. Your snowball will have grown larger. Okay. All right, so that's what it's worth. That's what you quote should pay for it. That's the fair market value. That is the intrinsic value. Yeah. Now because we're using windage, be as Charlie. It cracks me out. As Charlie says, the because of the I was just going to say it's exactly like the vicissitudes of life. There you go. Charlie. The vicissitudes. It's almost as though the windage affects the vicissitudes of life. It blows them hither and thither. One never knows how the windage will create a new vicissitude. You're making fun of my noun. I love it. So the best word I've heard in a week. I'm going to start using it like crazy. Well, the vicissitudes of life and the windage of a shot are very, very much the same kind of thing. It's the unpredictableness that happens as this bullet is traveling a thousand meters through the air, things can change in that period of time. And so over this 10 years period. Things out of your control. Out of your control. The vicissitudes of windage. Yes. So at the end of the day, we need to have a margin of safety. And that accounts for a lot of errors here. And our. No, the vicitudes, by the way, and the windage are what cause a lot of the emotional fear. I would say maybe it even causes all of the emotional fear. I would agree completely. The market hates uncertainty and unpredictability. So how does this valuation method handle it? Well, since we recognize that there are. There is windage out there. There's vicissitudes of life. We are going to cut the price in half. And give ourselves an enormous margin of safety. And therefore, if we have a sticker price or a intrinsic value of $186, that's what we should pay for it. If we're just a business buy in a business, we want to buy it for half of that. And that's how we handle the uncertainties that are out there. So let me kind of walk through this. We handle the uncertainties by being capable of understanding the industry. We handle the uncertainties by looking at the intrinsic characteristics of the company that make it durable against competitors. We handle the uncertainty by having management that's talented with integrity that's not going to rip us off. And then finally, after we figure out what it's worth if you have all of those things, we handle the uncertainty by cutting that in half and insisting we buy it for half off. Okay. That's how we do it. And that's a lot of windage that we can handle right there. And that's how we get comfortable that we've applied so much margin of safety to this process and from the step of the way. That is a lot of margin of safety. I'll give you that. It's not. It's margin of safety is priced into the original sticker price of $186. There's a tremendous amount of margin of safety built into that. And then if we've screwed that up somehow, we account for that by dropping the price in half. So there we have a high degree of confidence. If we can buy this thing, in this case for $93, we're in pretty tall cotton. We got a lot of things that can go wrong here and we're still going to come out okay. Our rounded price when we did it before was $100. Our margin of safety price was $100 per share. And now we've got $93 as our more specific price. Is that a big difference to you? No. That's $7. No. It's not a big difference. I mean, so much margin of safety, think about it's 7%. Being 7% off isn't really relevant. 7% could be a lot though. I mean, really. So let's say I'm looking at the lemonade stand for real and it's selling for $96. Do I go, well, that's above my more specific price. But it's below my general price. Or maybe I didn't even do the rounded one. Maybe I only did the specific one. I've got $96 and $73. Do I wait for it to go down to $93? I think if you're beginning investor, you try to insist on getting your number. And the more experience you have with this, two things will happen. First, you'll find that the vicissitudes of life are very real and can change things dramatically so that you recognize that you're not going to get perfection. And kind of enforcing that level of perfection on a beginner is just a good idea. Let's just be hardcore about it so that we don't-- This will be really strict. Yeah, so we don't waffle our way into something here. That mental discipline of being strict about it is good for us. As you start off as a beginner, we're going to make it a little tougher than we would in the future. Down the road, when you really know how to evaluate a business and know that you've got this big moat intrinsic characteristics are huge in this business. You look at what Warren Buffett does. He's going to buy stuff at 20, 30, 40% below the sticker price, not necessarily 50% below, which is something he may have insisted on 50, 60 years ago. So we're going to be tough on ourselves at the beginning. And I bet you get, as you do it over time, I bet you get a sense of which industries are okay to do that in and which are not okay to do that in. Or even like which type of economic situations are okay to do that in and which are really not. When you need to be strict and when you can be a little bit more lax and I have no idea. So I take your point about experience helping. Yeah, I mean, I can give you one example that's just really, really good. That is industries that require creative destruction of their own products to move forward with the new generation are inherently extremely dangerous in terms of predicting their value. You need every technology company that's out there. Precisely. Exactly. In other words, in order to invest in a technology company, I would need to see that they have other characteristics than just the technology that give them intrinsic protection. For example, Buffett is bought into IBM because he feels like they're brand plus they're the switching mode that they have where they, you know, if you're in, if you have IBM equipment and software and developers working in your shop, you tend to stay with them. That switching mode protects them and gives them with the kind of cash flow they generate. The opportunity to simply buy their way into any new technology. So IBM no longer has to be looked at as a technology company where they have to reinvent the wheel. They can simply buy the new wheel and move on. And that's precisely what they're doing now. In fact, that's what they did in the computer revolution in 1950s as they simply bought their way into the new generation. And so Buffett bought into it because it's not so much technology company as it is a gigantic brand sales company that has tremendous mode. I thought he changed his mind on IBM recently. Did I get that wrong? No, he said, you know, it could be a mistake, you know. Oh, yeah, that's a little bit changing your mind. But he doesn't think so. That is the least helpful statement of all time. It may have been a mistake. It's Uncle Warren being very politic about it all, you know. All right, let's go on because I want to dive deeper into this. So now we have our 10 cap view of the world says, buy the Sinc for 80 bucks. And our margin of safety on this is $93, maybe 93 to 100. So there's a pretty big range in there from those two ways of looking at the world. And I think that we've probably got as far as we can get in this particular podcast. And we're going to pick this up and look at the payback time analysis and the zombie value in the next podcast. So you guys don't get over. Okay, so we have two more. Two more. Yep. Okay. So we're starting to coalesce around a point. And when we see that, we start to become more and more confident that we're looking at the world at a pretty decent appraisal of the value of the business from four different points of view that have things. I like that. I did not like the idea originally of multiple kinds of valuation because it sounded like a lot of work. But now I'm kind of getting into it because it gives me a little bit. It gives me different ways at the same thing. And that thing that I'm trying to get at is it feels very amorphous to me. So if I have, well, now I've got two. And if we have two more ways to get there and they all kind of come up with like roughly the same thing, that would make me feel emotionally a lot more confident. Well, we're getting there fast now. So we're going to. You're like, yep, that's how that's supposed to be. That's supposed to be your way. Yeah. So, okay, good. Well, time to go play. See you. Hi, everybody. Hey, thanks for listening to invested the Rule One podcast. If you like this episode, you can always get our show notes and more details and links to the resources we discussed at investedpodcast.com. Also, as long as you're online, head on over to investedpodcast.com/workshop. For details on an upcoming three day live workshop that I'm hosting, all you got to do is enter the special podcast code stockpile. That's STOCAPILE stockpile into the application form and you guys can attend for free. So everything discussed on this show is either my opinion or it's Danielle's opinion and it is not to be taken as investment advice because I am not your investment advisor nor have I considered your personal situation as your fiduciary. This podcast is for your entertainment and education only and I really do hope you've enjoyed it. So until next week, it's time to go play. See ya.