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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era -- Ignore unavailable to you. Want to Upgrade?

To: Freedom Fighter who wrote (615)	8/12/1998 12:24:00 PM
From: Axel Gunderson	Read Replies (1) \| Respond to of 1722

Wayne: I agree with all you say and did not find your answer in the least unsatisfactory. As far as Abby is concerned, she has said that she is using the standard free cash flow model. Her inputs are the very high levels of free cash we have at present(super high margins of questionable sustainability), super low inflation (lower than any decade average since the 20's and 30's depression - basically since we have active central banking), and a risk premium that is substantially lower than the historical average. She is accepting a much lower risk premium than is usual on the continuation of perfection. OK, if she has said this then I don't have any objection to her stating that the market is undervalued. I still think that she should say what she considers a fair value range. For as you say, to take the position that something is undervalued, it should be obviously so by whatever model(s) you are using. Axel