AbstractThe speed is one of the most important factors in development of any dynamic system. It is shown that since the end of the 19-th up to the middle of the 20-th centuries the average growth rate of earnings, dividends and S&P 500 index was 1.5% per year. In the second half of the 20-th century the average growth rate of dividend speed up to 5%, earnings up to 5.5% and S&P 500 up to 8% per year. The arisen divergence in the growth rate of earnings and S&P500 led to the essential growth of the earnings multiple P/E. At the same time, from the beginning of 70- th, the 10 year earnings variability has grown, practically, 3 times. Such situation can result in development of long-term stagnate sideways movement.
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Bibliographic InfoPaper provided by EconWPA in its series Finance with number 0307001.
Length: 12 pages
Date of creation: 02 Jul 2003
Date of revision: 07 Jul 2003
Note: Type of Document - MS Word; prepared on IBM PC; to print on PostScript; pages: 12 ; figures: included
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long-term earnings growth rate; equity market; earnings multiple cyclic behavior; earnings variability; CPI variability; P/E variability premium;
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