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Wouldn't this expectation be built into the current price of the stock?
by ZitchDog 9y ago
Wouldn't this expectation be built into the current price of the stock?
- paulgb 9y agoYes, but money in the future is valued at a discount today. So even if an asset is 100% sure to be worth $100 a year from today, the market will value it at slightly less than that because there's no sense tying up $100 in capital for a year unless you get some profit in return.
- brokensegue 9y agothe risk you take for those returns means the price won't fully match the expectation. but you can mitigate that risk via diversification.