Summary: When the facts change on a stock that 'everybody knows', how do you change your mind? Professor Aswath Damodaran wrote an article about why Facebook is worth considering - https://seekingalpha.com/article/4162285-facebook-feeding-frenzy-time-pause - and provided a framework for how someone could update their views on a company. We take a look at that framework to see how it can be an example for investors, and where it might fall short. Topics covered: A summary of the professor's thesis and our three topics - the framework, the quantification, and margin of safety (1:30) Looking at Damodaran's framework and how it can be updated, along with a look at Mike's 'sold too early' story (3:20) How this framework can apply to story companies (10:15) The art of combining story with numbers (12:00) The limits to the deeply quantified approach, the presence of 'priors', and the annoying kid in your MBA program (18:30) Network effects, rotary telephones, and Facebook's vulnerability (24:45) Why doesn't Facebook have good stock market talk? And so what? (28:30) Damodaran doesn't use margin of safety. Good or bad idea? (31:00) The time value of investment research (35:50) The uncertainty in investing and my 'stock I missed' story for Facebook (39:45) The mutability of projections, and one last visit from the annoying kid (42:15)
