In case anyone finds this interesting, I did a simulation illustrating why Buffett defies the efficient market hypothesis. Even if one knew the future free cash flows of Company X precisely, the intrinsic value of the company according to a DCF analysis fluctuates over time. Therefore, if one buys a company where the future free cash flows can be predicted to increase for a number of years, the stock should rise significantly over the coming years even when all information has been discounted, as the graph shows. One can also see that once FCF stops growing, intrinsic value will stop growing as well. The decline in intrinsic value shown here would only happen if the company started dying, which many companies do sooner or later if they are too big to be acquired.