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Strategies & Market Trends : Buffettology

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To: Lars who wrote (202)6/21/1998 8:35:00 PM
From: Gary105  Read Replies (1) of 4691
 
Not sure the answer is that clear. An asset such as a share of stock is worth the present value of the sum of future earnings. Two keys here: growth which affect future earnings and discount rate which affects present value. If you believe discount rate is headed much lower (as Buffet does by his investment in bonds), then share prices might not be overvalued. Buffet is making sound investments in consumer issues and financial issues which benefit from low interest environment.
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