Why Positive Cashflow Matters
One sign of a bubble: traditional valuation principles are abandoned because "this time it's different". See Nifty Fifty, 2000 dotcom, 1920's crash, 2015 Chinese A shares, ... . It usually requires a new generation of people to enter the market because most people learn only on their own mistakes, not on other people mistakes.<p>This article talks about what negative cash flow means for the company. But what does it mean for the investor? A company that cannot go cash flow positive is worth zero - the value of the company is max(all future cash flows discounted by the interest rate curve, 0). The max(, 0) comes from the concept of the limited liability company.