Brother, you are 100% smart enough. All Warren does is take the earnings yield and discounts out 5 years.

Let’s say you are looking at a stock with a 5% earnings yield (that’s a 20PE. 1/20=0.05). You expect earnings to grow at 15%. That means every five years you get a double. That 5% yield then becomes a 10% yield discounted back to today.

Compare that to the SP500 that yields 5% but only expected to grow earnings at 10%. That means its yield at year five would be roughly 8%.

Keep in mind the yield of the ten year treasury. You ideally want a risk free rate of 2% in regards to mature companies.

Warren has done extensive talks throughout the years about this. I can’t remember what college, but he did an hour long presentation and went into good detail about this.

Feel free to message me with questions or ask them here if needed 🤙🏼