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Discussion in 'Pistons and NBA' started by mikhail1973, Jun 22, 2009.

  1. TaS

    TaS All-Star Forum Donor

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    Buffett famously underwrites with a 9% discount rate. 3 for inflation. 3 for uncertainty. And 3 for real return. He gets away with a very small uncertainty because he invests in things that he knows well.
  2. Ernie the Slow Adult

    Ernie the Slow Adult All-Star Forum Donor

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    Is this Jimmy or Warren we're talking about?
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  3. Nemo

    Nemo Pun Master Forum Donor

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    You could always put a tattoo of CV next to it....:)
  4. dba

    dba All-Star Moderator 1x Fantasy Champion Forum Donor

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  5. Darth Tater

    Darth Tater All-Star Forum Donor 6x Fantasy Champion

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    You would know the answer to that if you had read appendix ii lines 64-68 referring to combined vegetable and temporal posts.

    This was also referenced in the third "Rip Hamilton Appreciation Thread"
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  6. BillLaimbeer

    BillLaimbeer All-Star 4x Fantasy Champion Forum Donor

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    You mean the Rip Remembrance thread?
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  7. Mogilny

    Mogilny All-Star Forum Donor

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    The cost of capital is also included in the price, otherwise no trades would be performed between rational agents and there wouldn't be any market. And no, it still sounds like you are disregarding that the uncertainty/risk discount exists because of a factor that is equal to the discount - i.e the risk. This is why it doesn't make any sense to make claims like "That is why he would be stupid to sell now, rather than after it is implemented." It makes as much sense as to claim "That is why he would be stupid to buy when it is implemented, rather than now." The price mechanisms work both ways.
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  8. Darth Tater

    Darth Tater All-Star Forum Donor 6x Fantasy Champion

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    :lalala:This information is very important because...well because...uhmmm...well it just is!
  9. OLD SKOOL HQ

    OLD SKOOL HQ All-Star

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  10. The Panda

    The Panda Garbage Post All Star Forum Donor

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    What? We are talking about the discount rate. The financing costs are included in the discount rate, not the price.

    Please explain how I disregarded the inclusion of risk in the discount rate. I said that you can reduce the discount related to risk by reducing the level of uncertainty about future cash flows - say like, signing a new TV rights deal. That seems like an event which may reduce the level of uncertainty, and hence the discount rate.

    It doesn't if you think that rational actors rule the NBA franchise market. But they clearly don't.
  11. Laimbrane

    Laimbrane All-Star Forum Donor

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    I like how a modern sports argument devolves into things like "I said that you an reduce the discount related to risk by reducing the level of uncertainty about future cash flows." WHAT A TIME TO BE ALIVE!!!
  12. Mogilny

    Mogilny All-Star Forum Donor

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    So financing costs doesn't affect the price? That's an odd statement. Everything affects the price. There are no things that are included in the discount rate but not in the price.

    Because you haven't mentionened the negative aspects of risk once, only that you can earn money by waiting and lessening the risk. With this reasoning every seller would always wait and every buyer would never wait, aka no market. Good thing there is a mechanism that takes care of this - the price.

    So the reason owners should wait to sell until after the next tv licence deal is because they are irrational actors? I guess we are not getting further here. :)
  13. TaS

    TaS All-Star Forum Donor

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    They say "buy on the rumor, sell on the news."
  14. The Panda

    The Panda Garbage Post All Star Forum Donor

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    They do, but indirectly, through the discount rate. I feel like I am repeating myself here. Does the discount rate affect the price? Yes. Do financing costs impact on your decision to make an investment? They shouldn't, but they are included in the discount rate via the expected yield.

    Risk is just risk. It's not inherently positive or negative. It's also arbitrary. All I have done is explained how a discount rate will have less effect on a positive cash flow if the length of exposure to discount is smaller. This isn't rocket science. I don't think you really get what a discount rate is, or are just disagreeing with me to disagree with me.

    I think there is a fundamental misunderstanding of what a rational actor is here. Steve Ballmer and co offering double what the Ranadive's ponied up was irrational. Getting turned down was even more irrational. I'm saying that it is in his best interests to wait and sell after the TV deal is negotiated based on the information available to me, which is, that the TV will be significantly larger than the last one.

    Just remember, we were only talking about a single event (the TV deal being signed). There are negative cashflow events where timing has to be considered (paying luxury tax, new CBA's being negotiated, large scale salary cap changes) that will have an effect on price.
  15. Mogilny

    Mogilny All-Star Forum Donor

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    Yes, you are repeating yourself but it doesn't seem like you understand how pricing mechanisms work.
  16. webz

    webz All-Star Snub Administrator 2x Fantasy Champion Forum Donor

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    Get a room yo! :inlove:
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  17. The Panda

    The Panda Garbage Post All Star Forum Donor

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    I'm going to have to respectfully disagree with you on this one. This has nothing to do with pricing mechanisms, we were talking about the discount rate which forms part of a valuation. Valuations =/= price.
  18. TaS

    TaS All-Star Forum Donor

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    Different buyers have different discount rates.
  19. BillLaimbeer

    BillLaimbeer All-Star 4x Fantasy Champion Forum Donor

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    A penny saved is a penny earned.
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  20. coynejeremy

    coynejeremy All-Star Administrator 1x Fantasy Champion Forum Donor

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    Dave Ramsey says don't buy what you can't afford.

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