The dividend discount model, which measures the fair value ratio of stocks (e.g., 0.79 = 21% cheap, 1.12 = 12% overpriced), is a measuring kit to test investment instincts by aggregating valuations across market segments, revealing that small-cap stocks were very cheap while large-cap stocks were on average very expensive.
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Jeremy GranthamEvidence Quote
“every every stock would have a dividend discount uh ratio...we'd add them all together and it turned out that the sum of all the small ones was very cheap. The sum of all the big ones on average was very expensive”
Source
Jeremy Grantham: Lessons from 60 Legendary Years of Investing— The Master Investor Podcast with Wilfred FrostCreated: 8/12/2026, 6:39:12 PM
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