I would like to propose that we do a similar thing: construct a model of agreed lily ponds and of agreed royalty determinants to project royalties over time. This may provide a framework for news announcements, and provide assumptions to be amended by company financial reporting or guidance, or Gartner market forecasts, or new information on unit royalties, or market share, etc. It may also form a backdrop for valuation that can be tracked over time. I envision different folks opting in for primary responsibility for a lily pond or other aspect.
Of course, we'd surely need an endorsement, and appreciate guidance from our thread leader.
I am totally supportive and enthusiastic about the project. Believe it or not, but I was planning to propose the exact same thing. It occurred to me that probably never in the history of investing has there been an effort to jointly, and publicly, develop and keep refined an on-going model of a company’s projected performance. Let’s do it.
Within the next day or two, I will post a definition of a starter set of lily ponds. While the thread can start worrying about whether the set of proposed ponds is grossly inadequate, I will begin posting a starter set of assumptions about each pond.
As you all chew growing details about particular lily ponds, and as I wrap up presenting lily pond details, I will summarize out-year lily pond revenues, as well as the likely implications for WIND’s overall revenue and earnings. (I will post the assumptions used for the latter.)
As the thread refines lily ponds, I will update my models, and periodically report the implications for projected lily pond revenues and implications for WIND’s projected performance.
I confess that I do know the statistical formulas you alluded to for how to combine multiple random variables. When we get bored setting and estimating parameters, and want to include probabilities in the model, I will provide guidance. But don’t worry about probabilities now. We begin with expectations all around. Likely variation in outcomes will be determined informally by varying assumed values for parameters.
Allen
PS – If this process proves useful, I will email my models to any participant that wants to see for him/herself the lily ponds impacting WIND’s out-year performance. |
