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A comment on Why is the stock market rallying when the economy is so bad?. Parent comment

Re:Why is the stock market rallying when the economy is so bad? by clairity on Sunday May 10, 2020 @05:01PM (#23136140)
no one who values companies professionally predicts cash flows more than ~5 years out, certainly not decades, because predictions about economies, governments, societies, and institutions are all salient to those future cash flows and those predictions become rapidly worthless as you look further in the future.

what happens in practice is that you take the cash flows of year 5 and you annuitize it into the far future with the estimated growth rate, and call it a day.

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Re:Why is the stock market rallying when the economy is so bad? by wallacoloo on Sunday May 10, 2020 @06:00PM (#23136675)
> no one who values companies professionally predicts cash flows more than ~5 years out

> what happens in practice is that you take the cash flows of year 5 and you annuitize it into the far future with the estimated growth rate, and call it a day.

How is that not a prediction?

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Re:Why is the stock market rallying when the economy is so bad? by clairity on Sunday May 10, 2020 @06:18PM (#23136834)
it's done out of tradition, not prediction.
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