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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: valueminded who wrote (11950)	1/24/2001 12:15:32 PM
From: TimbaBear	Read Replies (1) \| Respond to of 79045

Hence the need for a relatively accurate risk free rate. For me it is easy to determine. Since I have a mortgage, I use the interest rate of the mortgage. It is essentially risk free (at least for the remainder of the mortgage period). I think you are mixing apples and oranges here. "Risk Free" means to the person investing the money. The lender on your mortgage still has risk at the rate they lent to you, at the minimum, they have default risk and they have inflation risk if you have a fixed rate. They accepted the difference between what they could get on a T-Bill and what they charge you as an interest rate as their desired compensation for taking on the added risk. This does not make it a "risk free" rate for them, just the rate at which they feel adequately compensated. This is not a "risk free" rate for you because this is a debt expense, not an asset return. By using the mortgage rate, you are in effect saying:"I can get (say)6% on a T-Bill, but I want at least X." Where X is the T-Bill plus some margin of return that raises the rate to your mortgage rate. Regarding your list, I had already looked at NVH and came up with a NetNet value of about $7.75/share which, I believe, is lower than current market price. FINL, by my calculations has a NetNet value of $4.76/share, which is also below current market price. I haven't looked at the other two. I just bought some ARWM at $2.00, I get NetNet at $1.85 with most of that from current assets. Looks like a decent growth rate. I have two more I'm interested in, but don't want to say what they are until I get them. Timba