Valuation has never been an exact science. Forecasting revenues, margins, capital expenditures, and discount rates is always a mix of data and judgment. Traditional methods like discounted cash flow often rely on a single set of assumptions: a certain growth, a discount rate based on macroeconomic data whose expectations change from moment to moment. This makes the valuation look simpler than it really is, and often underestimates risk. Monte Carlo simulation does not claim to give one certain number; it gives you many values with all the possible outcomes and the probability of each, providing a more realistic view of uncertainty.
Why It Matters in Egypt
The Egyptian market is especially volatile. Inflation swings, fluctuations in the EGP exchange rate, and interest rate changes can all have a big impact on company valuations. For companies that rely on imports, currency risk is a real factor that must be modeled probabilistically. Sectors such as real estate, energy, and