value of mco, page-4

Hello Patroyd,

I too get Daily Reckoning and being free have found it great value for money. This particular email was a great adv for Diggers & Drillers. I subscribe to Diggers & Drillers and have on balance made slightly more than my subscription. Let me just say I lost big time on AWE and I am making up for it on ADU, AZM & KAS. So overall I respect D&D and have been moderated many times for posting cut & paste small bits.


I would like to say for the record that your post reminds me somehow of the old arguments around Discount Cash Flow (DCF), and actually it doesn't, so much for my perceptions. I must be on something.. I am not a big believer in taking pure mathematics,( a bunch of equations), applying it to the real world and saying that its applied mathematics and it comes up with a model which everyone believes is the right answer.

And this is where it gets interesting philosophy for EV.


One lecturer once told me that even in the world of pure maths, DCF was flawed because given a future stream of cash flows and making them equal to a presumed surrogate market value as PV, then we would solve by trial & error and get a imputed internal rate of return (IRR). Now this looks good, until in the ideal world, not real world, we get say two solutions, Two IRR which just so happens solves DCF equations. Actually it turns out a bit like matrices and where there are more variables than equations there are an infinite number of solutions.

Now taking this useless knowledge and steping into real world of MCO and substituting in the values for variables into equations we still get infinite solutions none of which are right. All pretty useless. Okay there may be a max, min which is best approximation as in operational research but I wouldn't invest my money based on any type of investment model where inherently the maths alone has an infinite number of probable solutions before you even start.


In other words it is all pretty well *&*^%^&sh i t in IMHO.


I do not know why I proffer in writing this which could only be attacked so easily. All fundamental valuation methods are only indicative & inherently flawed. Those that believe in them have great faith and are only to be let down in a universe full of turbulence.


The above wasn't helpful. And I actually subscribe to D&D, am I some "poor adjective" or what? I need a drink.



I remember a philosopher once said that to define and know everything about a object ( eg a brick) one would need to know & define everything outside of an object which was not that object ie a brick. I figure if I ever attempted such a useless exercise that I would be as thick as a brick, LOL.


please don't anybody take the above as a criticism, the only thing the above criticizes is myself.






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