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Strategies & Market Trends : Gorilla and King Portfolio candidates - Moderated -- Ignore unavailable to you. Want to Upgrade?

To: rkral who wrote (956)	6/15/2004 4:18:41 AM
From: Mike Buckley	Read Replies (3) \| Respond to of 2955

Ron, There is no "risk discounting", per se, AFAIK. For those reading this thread wondering what the heck we're talkin' about, maybe a small clarification is in order. I tend not to get into discussions about quantifying risk because everyone perceives risk differently, and rightfully so. Though it's been a long time since I've studied the academic justification of DCF, I do believe a lot of people think of the discount rate at least indirectly related to risk management. If the discount rate is directly related to their perception of risk-free alternatives, the investor can benchmark the model with those alternatives in mind. On the other hand, I do agree with you that DCF analysis doesn't address risk in the manner I think Jim was perceiving. --Mike Buckley