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To: Moominoid who wrote (66411)	2/14/2003 10:12:14 AM
From: reaper	Read Replies (2) \| Respond to of 209892

<<If earnings are equal to free cash flow and the nominal growth rate of f.c.f. is equal to the difference in risk premia between bonds and stocks then the Fed model makes sense :) >> man, you've been spending too much time w/ them corporate finance textbooks. what risk premia are you assuming these days? i have always used 400-500 bps, which puts the discount rate at +/-9% today. assuming a 15% ROE, $50 of EPS, and a 4.5% nominal growth rate i'm still seeing about 600 as fair value for the S&P. Cheers