What is GULP? Reasoning from 200 Years Ago is Still Valid Now

How to Value Companies

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We value companies based on our estimate of earnings per share, usually two or three years out. I don’t look six months to a year out because too many other people are doing that, and I don’t look four or five years out because there are too many uncertainties in looking out that far. Then it’s a question of putting a multiple on those projected earnings. Over the past forty years the stock market has sold, on average, at about 15x earnings, so I conclude that an average company is worth 15x earnings. Above average companies, of course, should be worth more than 15x.
Source: http://www.valueinvestorinsight.com/