[dcftoapv]

Adding in a little more nuance. Free cash flow to equity is discounted at the cost of equity. The cost of equity increases as future cash flows become riskier. However, costs of financial distress tend not to get baked into valuations unless they are obvious because they are not part of the normal valuation process.

This is why it might be possible that the stock market would not decline as much in 2020 / 2021 as it did in 2008 / 2009.

However, something seems fundamentally wrong with valuations at the moment, I cannot put my finger on it, and so I'm overweight fixed income until I'm more comfortable that things are going to turn around.