Actualizing the phenomenon of investment value in volatile markets

Abstract

This paper examines the institution of investment value, defined as the value of an asset given specific investment objectives. The author argues that the traditional valuation benchmark – market value – exhibits insufficient reliability. Driven by systemic crises in both global and Russian economies, market value is progressively losing its evaluative capacity. These crises destabilize market mechanisms, primarily through capital market turbulence, excessive regulatory rigidity in credit, fiscal, and monetary policies, adverse commodity market trends, and intensifying competition for unallocated investment capital. Conversely, methodologies used to determine investment value demonstrate high verifiability and robust predictive power over medium- and long-term horizons, particularly within the income approach, while effectively internalizing the risk component in valuation. To refine investment-oriented valuations, the baseline calculation is typically augmented with a real options model. This integration embeds the autonomy of future managerial initiatives within the initial investment framework into the present value structure. The paper proposes an original classification of the factor structure of investment value and systematizes the analytical tasks addressable through this valuation type. To illustrate these arguments, a conceptual framework applying the income approach to determine investment value is presented. The study concludes that contemporary domestic valuation practices should prioritize investment value as an economic category. Unlike market value, investment value is insulated from the volatility of shifting market participant preferences. Furthermore, investment value aligns optimally with the structural realities of the domestic economy by: a) anchoring the analysis to the interests of the potential investor while reconciling them with the owner's position; b) capturing the dynamics of cash flows generated by the asset over a specified forecast period; and c) internalizing risk factors that influence income generation and, consequently, asset value.