Re: [A-List] IMF: Korea and elsewhere

["Christian Gregory"<christian11@xxxxxxxxxxxxxx>]

Hi Sabri,

Thanks for your response. I'm curious about the statement about risk--and I'm
going to change the subject to something I wanted to ask you about a while
ago. A week or two ago, you said something like every valuation that uses cash
flow should be thrown out. I think I can understand why, but

(1) in terms of understanding company risk, if investors had been watching
cisco's free cash flow for the last 2 years they could have known the jig was
up and gotten out early (again, assuming that mutual funds had an interest in
entertaining such bad news); and

(2) there are plenty of problems with risk models based on probability; most
models don't normally account for business cycle fluctuations, much less
depressions, so what you're left with GIGO (garbage in, garbage out) analyses.
What do you think?


All best,
Christian


> My point at the time was that Korea was at risk
and as you know, risk is about possibility not about certainty. Especially
with their domestic credit bubble they created to pump the domestic
demand up in the face of declining external
demand, they are more vulnerable than before.