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Politics : Ask Michael Burke
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To: BGR who wrote (68670)10/6/1999 11:23:00 AM
From: Michael Bakunin  Read Replies (1) of 132070
 
Oh, pshaw. You have so.

It should be obvious that even in a perfectly efficient market, there will always be some relative form of value. Under ideal conditions where all information is priced accurately, low multiples would be a proxy for risk, since high prospective returns would only be offered in return for assuming a position that carried high risks.

In real life, value reflects the judgement that the market has not struck the perfect balance between risk and reward in a given price.

-mb
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