The recent ascent of stock prices: can it be explained by earnings growth or other fundamentals?
An analysis of the current relationship between stock prices, dividends, earnings, and returns, aimed at examining the causes of the recent stock market surge. It reveals that the markets level cannot be explained by any single fundamental element of standard stock valuation models, but rather manifests optimism about future dividend growth (based on the present record growth in earnings) and a lower expected return (reflecting a diminished risk premium for holding equity).
Volume (Year): (1997)
Issue (Month): Q II ()
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- Timothy Cogley, 1996. "Why do stock prices sometimes fall in response to good economic news?," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue dec13.
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Carnegie-Rochester Conference Series on Public Policy,
Elsevier, vol. 46(1), pages 49-95, June.
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