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Subject:  Re: BX Converts Date:  4/18/2019  1:33 PM
Author:  Hohum2000 Number:  1747 of 1757

From Matt Levine's Money Stuff:

Isn’t it a little weird? There are two basic ways to think about stock prices, the corporate finance approach, in which a stock price is the discounted present value of the company’s future cash flows, and the simpler supply-and-demand approach, in which a stock goes up when more people want to buy it. The efficient markets hypothesis suggests that these approaches are the same, that people’s desires to buy stocks are correlated with the expected cash flows, and that if for some reason a lot of people shun a stock with high expected cash flows then arbitrageurs will step in and nonetheless push the price up to the fair level. But in the real world executives sometimes decide to do things to reduce future cash flows in order to, as Blackstone’s Stephen Schwarzman said on Bloomberg Television this morning, “reach a dramatically larger audience.” Blackstone’s stock was up this morning on news that its future cash flows will be lower, but that more people will be able to buy it.
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