In addition to fair value, Lynch looked for other indications that a stock would perform well.
FORBES: Valuing Donald Yacktman's Portfolio - The Peter Lynch Fair Value
They fear that fair value would lead to more frequent dips in banks' capital levels.
Yet volatility is real, the advocates of fair value reply, and dangerous if hidden.
The fair value of any investment is its future cash flow discounted for risk.
In other words, fair value did not just worsen the bust: it also fuelled the boom.
ECONOMIST: An accounting standard comes under the microscope
British and European share valuations are closer to this fair value, he estimates, than America's.
As I said last week, the stock is still very cheap relative to its fair value.
Closer to home, U.S. futures are below fair value but off their worst levels.
FORBES: The Fast Money is in Control and It Cannot be Stopped!
The combination has the U.S. futures trading slightly below fair value at the moment.
Under the circumstances, the Genentech price may be the one closer to fair value.
Based on those metrics, fair value is around 6.8 percentage points, Mr. Fridson says.
So, relying on fair value as a market argument would seem to be a costly exercise.
They use a classic discounted cash flow model to arrive at that fair value.
FORBES: Two Celebrated Investors Want To Fix Their Funds--And Chesapeake Energy
The bank takes a big write-down on assets, of 30% or 488 billion, reflecting their fair value.
FORBES: A Debt/Equity Swap To Recapitalize European Banks: A Real World Example
Apostles of fair value will need to tread carefully if they are to realise their vision internationally.
Therefore, to Peter Lynch, at fair value, the PEG ratio of a growth company should be 1.
FORBES: Apple Stock May Be Worth $1000 A Share To Peter Lynch
"It's been very difficult to find stocks that sell at a discount to fair value, " he says.
The Treasury could conceivably buy something above market value but below fair value and hold it to maturity.
If so-called fair value accounting had been in place then, just about every large bank would have collapsed.
Net gains on investments and gains related to the fair value of derivatives fell from a year earlier.
The Nasdaq, however, is weak heading into the open, with futures trading about 1.5 points below fair value.
FORBES: Greek Bailout Lifts Futures; Wal-Mart, Home Depot, and Kraft in Focus
In the case of many financial assets and liabilities, assigning a fair value would be a tricky and certainly subjective process.
You can freely play around with this model and see how the changes affect the "fair value" share price.
All parties agreed that the consumer wouldn't receive fair value for that price increase, and the project was scrapped.
WSJ: Should Utilities Be Required to Bury Power Lines to Protect Them?
Because of this, the calculation of Peter Lynch Fair Value is very straightforward.
FORBES: Apple Stock May Be Worth $1000 A Share To Peter Lynch
If it pays fair value or less, banks might be reluctant to participate.
Each is more than 20% overvalued versus its fair value, according to ValuEngine.com.
Low inflation implies that prices may have to fall by more in absolute terms to return to fair value.
If so, it seems something resembling fair value would still carry the day.
FORBES: Book Review: John Allison's The Financial Crisis and the Free Market Cure
But with thin, flaky trading volume, how do you know if the Hedgelet price is anything close to fair value?
应用推荐