Ann: TGA 2013 Results Presentation , page-30

"10% RRR is asking for too much given current interest rates. If I was to use a more accurate RRR I would use approximately 5-6% IMHO."

Your reply underscores a good point - each person's risk adjusted rate of return varies for different reasons - for example:

a) level of knowledge of the stock (it affects risk);
b) the investor's appetite for risk; and
c) alternatives open to the investor.

In my case, I have a $200K mortgage at about 7%, so in a no-tax environment, that could be the basis of my RRR, and then I would uplift it a tad to cater for the mortgage-paying option having zero risk, whereas even with my comfort with TGA, I am not 100% sure. Let us say that results in 8%. However, I suspect that if I trawled the market, I might find a better-than-pay-mortgage option, and so I settled on 10%. Other investors will have different RRR's for TGA. This is why I avoid busing the term "intrinsic value" - "subjective" or "personal" would be a more apt adjective.

Investors with less knowledge of TGA's business should have a higher RRR than those who know it well, and hence one should not be surprised to see RRRs greater than 10%. When it comes to buying price, then many investors add a MOS (margin of safety). Even for holders, there, is not one single SP above which they will sell, and below which they will buy. Neither is it an all-or-nothing situation - for instance - at $X I might sell some to pay off a personal debt - at $Y I might sell some to reduce my mortgage or to use up tax losses - at $Z I might sell some for estate planning reasons - all considerations that are personal to me.

In a rational world the sum of such personal thinking should set the SP, but the stock-market world is not rational - Mr Market is paranoid, so the actual SP bounces around on either side of what I'll call a fair-value SP. understanding this is the realm of the TA guys - not my strength.