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To: Lee who wrote (33820)	3/11/1998 2:17:00 PM
From: Jim Patterson	Read Replies (2) \| Respond to of 176387

re: Sorry but risk is a measurable quantity. This is a stupid argument. Risk is assigned a value because we don't know what is going to happen. Risk is a value that people set relative to how uncertain they are about the future. They don't know what is going to happen so they throw in a Risk premimum. They think they know so the value is low. But they and no one else knows what is going to happen, The End. RE: << I think the valuations that people place on companies like Coke are the result of the company's past performance. It's been apparent for awhile that consistent earnings performance generally rates a premium on price. >>> Ko is not repeating past preformance. EPS forcast are almost falt for the year. The stock goes up. I am not saying that KO is bad or that anything is wrong. I am saying the KO had rich valuations because it never missed, That is what they said 2, 3, 5, 10 years ago. Well, they missed and it don't look to good going foward. So why the increased valuations ? The Risk premimum is increasing. That is the Risk that they do or do not return to their historical norm. Investors are so confident that they will return to their norm, that they will buy the stock. The longer this return takes, the more likely that that Risk thing will show it ugly head. Jim