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Strategies & Market Trends : Gorilla and King Portfolio Candidates
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To: Mike Buckley who wrote (7429)10/4/1999 12:38:00 PM
From: Zirdu  Read Replies (1) of 54805
 
<<Where they used a 13% discount rate, I used 20%. Some people will be shocked to learn that I used such a high rate but I'll defer an explanation, if it's needed, for another time.>>

I would be most interested in the explanation. I thought that Warren Buffett used the 30 year bond rate (now 6.1%) for discounting future earnings to present value, on the theory that this was the best alternative "riskless" long term investment. It seems to me that 20% or even 13% are much too high, given current interest rates. As you say, using 20% as a discount rate certainly builds in a lot of margin for error.
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