[airstrike]

I've not moved the goalposts. I'm just saying the fact that stocks are also driven by people's perceptions of other people's perception of the stock's true price doesn't negate the fact that the discounted value of future cash flows ultimately underpins the asset's value.

For what it's worth, this is my field of expertise. I work at a top bank in Wall Street and assure you discounted cash flows isn't a "useless mental model". Just ask the Court of Chancery in Delaware.

[gfodor]

Discounted cash flow analysis isn't a useless mental model, assuming the market will (eventually) price stocks that way is. How would you disprove that claim? You can't -- it's unfalsifiable and hence meaningless.

[airstrike]

I can prove people use it on a daily basis to value stocks, publish equity research reports on them, and the courts look to it as one approach to inferring the fair value of an asset. It has a non-zero impact on the way markets value stocks.

DCF models aside, the notion of the "present value of future cash flows" (and the time-value of money concept that drives it) underpins all of corporate finance. It is the most fundamental building block of modern finance and it's in everything from Finance 101 courses to derivatives trading. Clearly the market utilizes it to value assets and stocks are no exception.

I'm not saying the entirety of valuation is predicated on DCF models -- feel free to re-read any of my comments.