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Subject:  Re: More thoughts on discount rates Date:  12/14/2010  10:56 AM
Author:  nonzerosum Number:  102 of 1287


I think your comments about ERP are spot on. And I also agree that DCF analysis is a minefield of potential error compounding.

I don't think there is a chance that you are doing anything completely wrong. Reason is that you are accounting for risk outside the DCF with "behavioral investing" and broader analysis. For example, you dumped financials from your screen results.

Personally, I really like that angle about disgust/ennui, because we know from behavioral studies that the human emotional pendulum has a wide arc. I see some of that in health insurance, solar (esp Chinese), military (MANT, SAI, OSK), drillers after BP, semiconductors, and others. The challenge is to figure out how much of the disgust is excessive...and MUE is one place I visit for that!

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