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To: Perspective who wrote (66326)	2/13/2003 11:34:36 AM
From: reaper	Read Replies (1) \| Respond to of 209892

<<Why the hell are they adding dividend yield to earnings yield? Last time I checked, the divvies had to be paid out of earnings. >> dood, you obviously do not understand the "new math". have you ever read "Dow 36k"? funniest thing in the world. Hassett was an actual professor at Columbia (though he did not get tenured and apparantly couldn't get a job at another U as he ended up in a think tank). they based their 'perfectly reasonable price' analysis on a dividend discount model. so they paid out a growing stream of dividends, and discounted them back. what the farking morons forgot, however, is that for the dividends to GROW some (actually, a lot) of the earnings have to be re-invested in the business and thus cannot be paid out as dividends. duh!!!! there was an hilarious online exchange between these morons and the editor of The Economist over this issue as well as their discount rate assumption (put simply -- equity cash flows are a junior claim to debt cash flows. so how the F*CK can you discount them back to the present at a LOWER discount rate; e.g. the treasury rate) it amazes me that for all of the 'advances' in finance since Graham & Dodd these farking morons still don't know anything. Cheers