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Investor expectations and fundamentals: disappointment ahead?

Author

Listed:
  • John B. Carlson
  • Eduard A. Pelz

Abstract

The average annual return of the S&P 500 since 1994 has exceeded 25 percent. Confidence is high and investors are looking forward to continued above-average returns. The authors of this Economic Commentary attempt to reconcile investors' expectations with a decline in the equity premium, using a standard approach to stock-price valuation.

Suggested Citation

  • John B. Carlson & Eduard A. Pelz, 2000. "Investor expectations and fundamentals: disappointment ahead?," Economic Commentary, Federal Reserve Bank of Cleveland, issue May.
  • Handle: RePEc:fip:fedcec:y:2000:i:may1
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    Citations

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    Cited by:

    1. Nathan S. Balke & Mark E. Wohar, 2001. "Explaining stock price movements: is there a case for fundamentals?," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Q III, pages 22-34.
    2. John B. Carlson & Eduard A. Pelz & Mark E. Wohar, 2001. "Will the valuation ratios revert to their historical means? Some evidence from breakpoint tests," Working Papers (Old Series) 0113, Federal Reserve Bank of Cleveland, revised 2001.

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    Keywords

    Stock - Prices;

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