Comments on: Building flexibility into business planning http://www.tomspencer.com.au/2009/06/11/build-flexibility-into-business-planning/ An evolving perspective on management consulting, business strategy and investing Fri, 30 Jul 2010 13:28:59 +0000 hourly 1 http://wordpress.org/?v=3.0.1 By: astri http://www.tomspencer.com.au/2009/06/11/build-flexibility-into-business-planning/comment-page-1/#comment-3311 astri Fri, 10 Jul 2009 04:47:21 +0000 http://www.tomspencer.com.au/?p=1806#comment-3311 the capm does not work in the real world i reckon. there are too many arguments around capm. the capm does not work in the real world i reckon.

there are too many arguments around capm.

]]> By: z http://www.tomspencer.com.au/2009/06/11/build-flexibility-into-business-planning/comment-page-1/#comment-2997 z Sat, 13 Jun 2009 07:06:27 +0000 http://www.tomspencer.com.au/?p=1806#comment-2997 This is actually a criticism I have of my finance curriculum too. A lot of finance is "shooting in the dark", in that most methods are underpinned by assumptions which are not very rigorous. Essentially, the price of a security is what the agreed upon price that a seller and buyer transact it for. Whether the seller and buyer uses CAPM, constant dividend growth model, APT or some other model for what the price "should" be doesn't matter unless the buyer/seller acts upon that prediction. Or so I believe... This is actually a criticism I have of my finance curriculum too.

A lot of finance is “shooting in the dark”, in that most methods are underpinned by assumptions which are not very rigorous.

Essentially, the price of a security is what the agreed upon price that a seller and buyer transact it for. Whether the seller and buyer uses CAPM, constant dividend growth model, APT or some other model for what the price “should” be doesn’t matter unless the buyer/seller acts upon that prediction.

Or so I believe…

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