Charlie Munger on Discount Rates and Opportunity Cost

Discounting future cash flows is one of the most frequently used methods of business valuation. It’s also the preferred method of Warren Buffett and Charlie Munger. If you’re looking for value stocks, and exclusive access to value-focused hedge fund managers, check out Hidden Value Stocks. While he’s never laid out his exact valuation process, Buffett has hinted that he uses the discounted cash flow method multiple times in the past. For example, at Berkshire’s 1993 meeting of shareholders, Buffett made the following statement regarding business valuation: “Once you’ve estimated future cash inflows and outflows, what interest rate do you use…