Profit and share prices do not equate to value

A new book from McKinsey has pointed out the four cornerstones of value:

1. Companies create value by investing capital from investors to generate future cash flows at rates of return that are greater than the cost of that capital.
2. Value is created for shareholders when companies generate higher cash flows, not by rearranging investors' claims on cash flows.
3. Companies' stock market performance is driven by changes in stock market expectations, not necessarily by anything the company actually does. (the "expectations treadmill")
4. Value of the business depends on who manages it and what strategy they pursue - the "best owner" principle.