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

To: sjemmeri who wrote (14051)	3/1/2002 1:29:25 PM
From: jeffbas	Read Replies (1) \| Respond to of 78683

Stephen, just because it is difficult to do, does not mean it should not be done. (Note that I recommended that option expense be in a footnote, for the reason stated.) Modeling is used all the time in the difficult task of establishing accurate reserves for unpaid claims for group health insurance and other long tail liability companies. It is the single most important factor in earnings swings. The numbers are rarely on the nose, and large adjustments sometimes have to be made - because the past is sometimes a bad guide to the future (and every now and then mgmt is manipulating earnings). ....... (Whether Black-Scholes is a good, bad, or indifferent model is irrelevant to the issue of whether it should be done or not.)