In this recent presentation at Columbia Business School, Michael Mauboussin discusses expectations investing and why you have to earn the right to use multiples. Here’s an excerpt from the presentation:
Mauboussin: I would always like to say, by the way it’s got two sides of the factor. You have to earn the right to use multiples. When I say you have to earn the right that means that if you say 20 times revenue is appropriate for XYZ, you understand the economic implications of what has to happen for that to make sense, otherwise you just lost your ground.
You can watch the entire discussion here:
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