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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Paul Senior who wrote (4693)	8/18/1998 6:50:00 PM
From: Freedom Fighter	Read Replies (1) \| Respond to of 78627

Paul Senior, >>Value investors should dismiss any 'treatise' on value investing that has within it, a sentence which begins: "Mathematically,..." or uses exponential factors to try to make a point. These articles are written by academics or 'strange and wonderful' people whom no rational person should trust with their financial future or their investing funds. JMHO, and although I've been wrong many,many times... I've never been wrong on this.<<< In general I completely agree with you. This is especially true when it comes to complicated mathematics. In this case however the model is the most basic demonstration of how total stock returns are achieved. (Dividends + Long Term Earnings Growth) It then just demonstrates what kind of returns one could expect given various assumptions about the dividend yield in the future or a reversion to the mean aggregate market level. I believe it is a very useful model. If one applies this model on a historical basis, I know of no model that would have produced better results on the aggregate market if it was used to compare returns on various asset types and make educated guesses about risk and reward. Despite the mathematics, this one is worth it. Buffett uses a similar model for individual stocks. Wayne Crimi Value Investor Workshop members.aol.com