when we can do monte carlo?
Why do we still use DCF

it looks like some people are saying Monte Carlo is not common and doesn't need to be, and it seems like you're insisting that it is pretty common. Which is it?
wth are you talking about? it’s like asking ‘why do we still use OLS when we can use R instead’?
you’re making an inconsistent comparison, that’s all. Monte Carlo is a parametric simulation method for finding first moments, while DCF analysis ascribes a net present value to a stream of cash flows. they’re not competing concepts. if you know the distribution of your cash flows yo can actually use MC to compute your NPV. quite a few valuation methods work like that, although there are often more efficient methods (latin cubes,...)

thank you bro, this is very helpful.
it looks like some people are saying Monte Carlo is not common and doesn't need to be, and it seems like you're insisting that it is pretty common. Which is it?
wth are you talking about? it’s like asking ‘why do we still use OLS when we can use R instead’?
you’re making an inconsistent comparison, that’s all. Monte Carlo is a parametric simulation method for finding first moments, while DCF analysis ascribes a net present value to a stream of cash flows. they’re not competing concepts. if you know the distribution of your cash flows yo can actually use MC to compute your NPV. quite a few valuation methods work like that, although there are often more efficient methods (latin cubes,...)

I think what I wanted to know was why monte carlo wasn't used more often to compute NPV, given that it could take into account the distribution of cash flows. But I would imagine that it's because we often don't know that distribution?
that, and if we only look at the mean, it’s way more efficient to compute the expectation directly

thanks. why shouldn't we also care more about other moments though, like variance? just impractical for decision making?
I think what I wanted to know was why monte carlo wasn't used more often to compute NPV, given that it could take into account the distribution of cash flows. But I would imagine that it's because we often don't know that distribution?
that, and if we only look at the mean, it’s way more efficient to compute the expectation directly

it looks like some people are saying Monte Carlo is not common and doesn't need to be, and it seems like you're insisting that it is pretty common. Which is it?
wth are you talking about? it’s like asking ‘why do we still use OLS when we can use R instead’?
you’re making an inconsistent comparison, that’s all. Monte Carlo is a parametric simulation method for finding first moments, while DCF analysis ascribes a net present value to a stream of cash flows. they’re not competing concepts. if you know the distribution of your cash flows yo can actually use MC to compute your NPV. quite a few valuation methods work like that, although there are often more efficient methods (latin cubes,...)
Shutup go Read Dixit Pindyck and read some asset pricing literature. Come back when you know what you are talking about.

DCF is used to justify any pricing that clients want or managers want.
With good marketing and salesmanship you can convince the market that your valuations are correct and you make off like bandits.Anybody who spent any time on DCF knows it's so sensitive to your assumptions (which there are many) that it's a joke. What are the odds you can get any of your assumptions right?