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Strategies & Market Trends : The Amateur Traders Corner -- Ignore unavailable to you. Want to Upgrade?

To: Jon Khymn who wrote (533)	8/27/2000 5:08:23 PM
From: Fundamentls	Read Replies (1) \| Respond to of 19633

The discount rate is only partly for inflation, Webby. It's principally for risk (inflation is just one component of risk). You have to pay me more to put my money in a risky investment than a safe investment. It's a basic underpinning of any finance course. And it's quite normal for the discount rate to exceed the growth rate in mature companies. Their cost of capital is a mixture of both debt and equity, and the debt is lower and averages it down. And mature companies tend to have their stock price level out because, well, they're mature companies. So I'll stick with $37 as a long term target. You stick with $80 or $100. We'll eventually find out who's closer! In the meantime, may be both prosper from our trading decisions. Regards, Fund