Intrinsic value doesn’t seem like it can be intrinsic if it uses extrinsic inputs like risk free rate and equity risk premium. This all seems influenced by human social practices and rituals, and that is okay. Have been wondering about this lately.
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Replying to @LAForeverHall
The value of the asset to you depends on your discount rate. The value of the asset to the market depends on the market's discount rate. So your intrinsic value can differ meaningfully from the market's intrinsic value.
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Replying to @PythiaR @LAForeverHall
This happens all the time in the private markets.
$BX buys an unfinished building at an implied 15% IRR and sells it to a pension fund with a low cost of capital at a 7% IRR. The intrinsic value of the asset to the two parties is different because they have different WACC's.1 reply 0 retweets 3 likes
Replying to @PythiaR
I don’t disagree with that but the word intrinsic seems like it should be extrinsic.
9:18 AM - 15 May 2020
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