Here is the only thing I do not get about these models....
--> Why does the observed price have to converge with its theoretical value? Is it not possible for the market to be out of whack long enough to bankrupt you before it moves in your favor (if it even does move in your favor)? Think LTCM, or better yet think of markets now, just look at the P/E multiples. These firesale prices of good companies are not justified, however there is no reason why they can't go much lower or much higher.