Among associations representing pension managers, for instance, much debate has focused on whether the 8 percent rate of return
assumed over the valuation period is too high.
Not exact matches
If Mr. Musk were somehow to increase the value of Tesla to $ 650 billion — a figure many experts would contend is laughably impossible and would make Tesla one of the five largest companies in the United States, based on current
valuations — his stock award could be worth as much as $ 55 billion (
assuming the company does not issue any more shares
over the next decade, which is unrealistic).
Over time, the dilution can be offset by the increased
valuation,
assuming the business continues to perform well with each round.
But looking
over recent decades, that change has been fairly smooth, and on a relative basis, the effect on
valuations is far more modest than investors seem to
assume.
Lets work through the numbers real quick to get a
valuation for the current Bitcoin market capitalization, and for the market capitalization for new Bitcoins produced
over the next year (
assuming a constant price).
We can
assume that its terminal
valuation will gravitate towards some natural average, but history has shown that such an average, if it exists, can change
over time.
The above 2.86 % gordon equation result takes today's
valuations, mean reverts them
over three decades, but
assumes no loss due to selling underwater from your starting FIRE position.
The green bars in Figure 10
assume CAPE ratios and currencies move just halfway back to historical
valuation norms
over the next decade.
Introduction Whenever there is a rise in stock values as we have experienced
over the past year or so, it seems to be human nature to automatically
assume that
valuations have become too high.
The portfolio has a 80 % / 20 % split and if we
assume inflation runs at a 2.0 % clip, I think the expectation of a 3.5 % real return is reasonable
over the next decade
assuming stock
valuations stay the same.