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#4158·Benjamin DaviesOP revised 9 months agoI was careful to say "It is important to buy assets for significantly less than you think they are worth". Value is certainly subjective (in the sense that things are valued differently by different people).
As for methods of valuation, there are many out there, each with their pros and cons. Discounted cashflow (DCF) valuations are my preferred method as they directly address the purpose of investing: giving up value today in exchange for more value in the future. The key problem with this is that the future is inherently unpredictable, so building a DCF involves educated guesswork about the future and is inevitably imprecise (varying massively by the nature of the asset... the USD return from a US govt bond is more predictable than the USD return of a tech stock).
The unavoidable flaws in valuation methods are why we should try to buy assets at steep discounts to our valuations of them. The deeper the discount, the bigger our mistake can be without it hurting us.
I think this did not address what I think is the key part of the question which is 'how can something have an intrinsic value if value is subjective'.
I simply do not think all value is subjective. One can alter value through their own subjective experience. I personally still hold on to a paper napkin from a sentimental trip that I went on, and that creates a personal premium value for that napkin that goes above the utility and scarcity conditions of that napkin's value.
The contrary is obviously true. I doubt there are many monks that intend on buying Ferraris, even if they had the means to do so, so their subjective value impacts what would be considered the total of a Ferrari.
However, to speak of the 'intrinsic' side. I think value is best split into a multiplicative relationship between utility and scarcity. A toll road is a great example. Many times, there aren't many alternative roads, if any, and its utility at getting you to where you need to go should be non-zero assuming you intend on going where that road takes you. So, if a toll road were to crop up on the market selling for $1 dollar, assuming no 'strings attached', that would be a clear mispricing one could diagnose on an 'intrinsic value basis'.
I think it's incorrect to say that something cannot be intrinsically valued due to subjectivity being the primary motivator for humans, and so since subjectivity drives exchange, valuing that relationship is not possible. We can have long lasting theories of human behaviour or social systems that allow us to assign an objective/intrinsic value.