CSL possible pull back to low $200's, page-97

This is the sleeper which everyone seems to be conveniently ignoring.

For long-duration growth stocks such as CSL, a change in the discount rate is the single biggest determinant of the present value of future cash flows.

Few people appreciate the financial maths around this and how the crunch over the past two or three years in the major determinants of the discount rate - namely the risk free rate - has significantly benefited the market value of companies such as CSL.

They yield on the US 10-Year has doubled over the past 6 months (admittedly from truly bombed out levels); if it does so again - which it could very easily do in a world looking at life after Covid sometime over the next 12 months - then CSL's share price will certainly be lower than it is today.

Owning CSL today at >40 P/E multiple is effectively taking out a call option on the bond market.

And with bonds being as pumped up as they are given the current extreme global events, I don't know how that can be a sensible thing to do.

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