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Pastimes : Clown-Free Zone... sorry, no clowns allowed

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To: pater tenebrarum who wrote (1895)7/3/2000 3:25:08 PM
From: Ilaine  Read Replies (1) of 436258
 
Thanks. I was playing with a calculator on the Dismal Scientist site, which allows you to calculate fair value for the S&P 500, after reading the Kudlow analysis last week. One thing I don't understand is his argument that the proper discount rate should be that of Baa bonds, not the 10 year T-bond. Baa bond rate is about 8.9% right now, 10 year T-bond about 6%. Shouldn't the higher interest rate being used as the discount rate CUT values instead of raise them?

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