valuation, page-21

My point is that no companies last forever so why should any company be prised for idefinite existence? How many of the companies from the Dark Ages are still trading? I much prefer using existing ROE and then use a conservative Requiered Return then to guess about furute ROE's and PO's. You can not put a price on a company with a high ROE that would be able to maintain this indefinitely (beyond the expansion of the Sun etc., etc.) as no company lasts forever.

"The point is that it's not conservative to assume that Matrix can maintain a 50% ROE whilst reinvesting 90% of their profits.

I don't follow your point that a company that can maintain a high ROE indefinately is worth an infinite amount of money, care to explain?

If you use an unsustainably high ROE & low POR you will inevitably overvalue a company. I don't see how using a sustainable forecast ROE & POR is gambling (read: lower ROE/higher POR). To the contrary, you would be providing a larger margin of safety"