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Strategies & Market Trends : Gorilla and King Portfolio Candidates
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To: A.L. Reagan who wrote (52177)7/17/2002 10:34:07 PM
From: paul_philp  Read Replies (2) of 54805
 
Pandora's box or not I think that you have your facts wrong but I am not certain, which is why I asked for a link. I read a study that showed FCF and earnings are much more corelated than any one year picture would indicate. At the end of nine innings FCF = GAAP earnings or the balance sheets dont balance.


Would you pay the same for a guaranteed flow of cash payments as you would for an uncertain stream of GAAP earnings, the reinvestment decisions for which are made by corporate officers and boards beyond your control? Of course not, you'd pay less for the uncertain stream.


I think you are correct except for the very long term where the S&P earnings and treasury risk profiles become similar. There are wide local variations in the S&P earnings but the very long term picture is quite consistent.

Paul
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