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Strategies & Market Trends : ahhaha's ahs

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To: ahhaha who wrote (3124)	10/17/2001 3:24:56 AM
From: Mark Adams	Read Replies (1) of 24758

>>I assume those making the decisions care what future interest costs are to those who will bear the burden.<< Who is making decisions? AG? The decisions are made by all of those bearing the burden. I meant those making the decision on shortening the duration or not. Has nothing to do with what rates are, but rather what policy regarding Govt cash/debt management. >>The CEO/Board would probably weigh those benefits against the refinance risk going forward.<< That can't be done because no one has ever been able to anticipate the cost of money. Good point. But that's part of the executive job description, making decisions based on incomplete data. I suspect that's why RD has incorporated scenarios into their strategic planning. The right way to proceed is to look for opportunity given the resources available. You don't bet on what you don't have and you build on what you got. That's the way I prefer to operate- but others will argue that you can't operate on a grand scale without embracing risk and financial leverage. Those that do so successfully are subject of books. Those who do so and fail, well, we don't hear much about them. >>In other words, what are the risks for making the average duration shorter?<< You'll never know because extra or unsystematic risk is orders of magnitude outside what is required for meaningful calculation. True. There are outlier event risks that can't be accounted for by planning. But that doesn't mean we shouldn't try to grasp what some of the risks might be. Especially the more probable ones. CHK? It has a PE of 1.98. You can't find a worse investment. It isn't an investment. It's a bond. The worst thing you can hold is a bond. Not even in true deflation CHK is one I've followed over the 97/98 oil bust. For my perspective on it- Message 16270554 It's worse than a bond, in that there is no coupon. Maybe a zero bond.

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