It might feel positively retro to apply discounted-cash-flow valuation to hot start-ups and the like. But it’s still the most reliable method.
For the past several years, investors have once again been piling into shares of companies with fast growth and high uncertainty—especially Internet and related technologies. The rapid rise and sudden collapse of many such stocks at the end of the 20th century raised questions about the sanity of a stock market that appeared to assign higher value to companies the more their losses mounted.
