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Pastimes : Ask Mohan about the Market -- Ignore unavailable to you. Want to Upgrade?

To: Joseph G. who wrote (8136)	11/16/1997 4:22:00 PM
From: Rational	Read Replies (1) \| Respond to of 18056

Joe: You are right about the risk premium being forgotten because a lot of investors believe that S&P is as safe as the US Govt. But, they also omit the growth rate which compensates the reduction in value due to a risk premium. So the data used in the model are quite heuristic. About discounting to infinity, it is not much of a problem because the discounted values of cash flows after (say) 15 years have near zero contribution to the present value. In any case, Finance is so exciting because you can still have a value of your judgement. You do not have to be consistently accurate. But, when one is lucky, he/she becomes a hot shot to make a ton of money to retire after the Wall Street kicks him/her out. Do you know the typical age of retirement in Wall Street? You may not like to hear <VBG>. Sankar