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Biotech / Medical : Elan Corporation, plc (ELN)
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To: IRWIN JAMES FRANKEL who wrote (2406)6/25/2002 10:49:11 PM
From: John Metcalf  Read Replies (1) of 10345
 
"I have heard others make the same point that the market is still pricey from an historical view. I have never seen anyone who takes that view try and adjust values for the prevailing interest rates."

Actually, Graham and Dodd did adjust values for interest rates. But, it's been some time and people have forgotten. Ben Graham's starting point in evaluating investments was the "risk-free" return on bonds. Graham insisted on a risk premium, or "margin of safety" for an investment other than bonds. Warren Buffet reminded us of this principle recently in his annual letter to stockholders of Berkshire-Hathaway.

Unless there is a hidden house of cards at Elan, I see a margin of safety there, that is made even more attractive by 10-year TSY at 4.814%.
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