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https://boards.fool.com/piv-er-25678560.aspx
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| Subject: PIV-ER | Date: 7/12/2007 5:34 PM | |
| Author: Duxx2001 | Number: 1343 of 1817 | |
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Hello Everyone... I like the idea of the PIV-ER... I think this is a great excersise that we must perform in our selections and portfolio. But I have a question regarding the ER portion. In the example that Heiserman wrote in The Street. He mentioned that WMT intrinsic value is around $71 and current price is $48. Therefore, ER = (71-48)/48 = 48% So far so good, but the above is just an expectation that the stock will jump to $71 right now. My suggestion/question is that we should consider the time value of money. In the above example, if the stock goes to $71 in 2 years our return will be 21% (not bad, but not 48%), and if it takes 3 years our returns will drop to 13%! (this does not seems as good as expected). Any comments/thoughts? |
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