Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: Kevin K. Spurway who wrote (28720)	2/23/1998 8:34:00 PM
From: AK2004	Respond to of 1572658

Kevin if I remember the correct definition of fair value is: Max(liquidation value, pv of distributable earnings). And as you pointed correctly the current liquidation value of the stock $20.75 is a lower bound of fair value. And you are also correct in saying that building earnings scenarios (distributions) is practically impossible. The extra difficulty is to separate the distributable earnings makes an impossible task even harder. Profits is right about CAPM approach as been useless though. APT is slightly better at that but not much since again we have to construct a set of unbiased scenarios of stock prices together with interest rate changes and inflation. In that it becomes a multi-factor stochastic model which a totally different animal all together. Regards -Albert