logoalt Hacker News

xboxnolifesyesterday at 8:11 PM1 replyview on HN

> In the context of investing there is a correct price for financial assets that is given by trading everything back to dollars in the present.

This doesn't make sense though. The only reason I would buy an investment is if I believe it will grow in value from the point that I bought it. That means I'm pricing it at its future ccost.obviously other people are doing the same, so the actual cost of the investment will always rise above current value if people believe its a good investment.


Replies

whatshisfaceyesterday at 8:38 PM

I didn't write out enough to fully explain the idea. Here is the wiki page where you can find the details: https://en.wikipedia.org/wiki/Stochastic_discount_factor