Co-produced with R. Paul Drake for High Yield Landlord
Any time the price of any security falls, one tends to see statements like “the market is discounting many years of reduced earnings.” These pronouncements show up in media articles, in chat rooms, and in comment strings.
Yet most of these statements are false. Just as the word “exponentially,” which means “growing explosively,” has been dumbed down to mean “growing steadily,” the word “discounted” has been dumbed down to mean something like “reacting with disappointment regarding.”
Here we visit discounting from its literal meaning in the