[3] For his thesis, Joseph Schumpeter suggested the question of the intrinsic value of a common stock, for which Williams' personal experience and background would serve him in good stead.
The work discusses Williams' general theory, as well as providing over 20 specific mathematical models; it also contains a second section devoted to case studies.
Williams was among the first to challenge the "casino" view that economists held of financial markets and asset pricing—where prices are determined largely by expectations and counter-expectations of capital gains[7] (see Keynesian beauty contest).
[7] (Theory of Investment Value opens with: "Separate and distinct things not to be confused, as every thoughtful investor knows, are real worth and market price...".)
Thus, for a common stock, the intrinsic, long-term worth is the present value of its future net cash flows—in the form of dividend distributions and selling price.
Today, "evaluation by the rule of present worth", applied in conjunction with an asset appropriate discount rate – usually derived using the capital asset pricing model (Harry Markowitz and William F. Sharpe), or the arbitrage pricing theory (Stephen Ross) – is probably the most widely used stock valuation method amongst institutional investors;[12] see List of valuation topics.