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The Speed

Author

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  • Dmitry Baryshevsky

    (Belarus Builder's Union, Minsk, Belarus)

Abstract

The 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.

Suggested Citation

  • Dmitry Baryshevsky, 2003. "The Speed," Finance 0307001, EconWPA, revised 07 Jul 2003.
  • Handle: RePEc:wpa:wuwpfi:0307001 Note: Type of Document - MS Word; prepared on IBM PC; to print on PostScript; pages: 12 ; figures: included
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    References listed on IDEAS

    as
    1. Harrison, J. Michael & Pliska, Stanley R., 1981. "Martingales and stochastic integrals in the theory of continuous trading," Stochastic Processes and their Applications, Elsevier, vol. 11(3), pages 215-260, August.
    2. Chow, Gregory C., 1997. "Dynamic Economics: Optimization by the Lagrange Method," OUP Catalogue, Oxford University Press, number 9780195101928.
    3. Black, Fischer & Scholes, Myron S, 1973. "The Pricing of Options and Corporate Liabilities," Journal of Political Economy, University of Chicago Press, vol. 81(3), pages 637-654, May-June.
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