I 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 and is imprecise.
The flaws in valuation methods are why we should try to buy assets at steep discounts to our valuations of them, in case we are wrong.
I 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.