[patrickscoleman]

I don’t disagree that property value is a ritualized social fiction, but there are some glaring errors in this.

Namely they define value = future earnings / discount rate, and then when showing the example with Amazon use past earnings.

Clarification: typically[1] future earnings = sum of all future cash flows, which is different than profits. Businesses (or a music catalog) keep making money and don’t just pay out once.

It’s an arbitrary formula too, but they’re not staying consistent with their arbitrary formulas.

And there is some effort to find a mathematical basis for the discount rate, e.g. CAPM [2]. Actual asset prices often are inconsistent with this and other models of the discount rate. Lots of hand wringing ensues and nobel prizes in economics are dolled out.

[1] https://en.m.wikipedia.org/wiki/Discounted_cash_flow [2] https://en.m.wikipedia.org/wiki/Capital_asset_pricing_model