The discount rate illusion
You can't just lower discount rates unless you also lower your estimate of cashflows
By Buttonwood
THERE is a debate over asset bubbles at the moment and having worked through, in disbelief, the dotcom bubble, it is plain that it is extremely hard to call the top. Given publishing timetables, whether Robert Shiller and Andrew Smithers/Stephen Wright were brilliant or just lucky in bringing out their books on excessive valuations around the market peak in 2000 is hard to tell.
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