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Path: utzoo!watmath!clyde!burl!ulysses!allegra!dsf
From: dsf@allegra.UUCP (David Fox)
Newsgroups: net.invest
Subject: Re: Stock market a present value machine
Message-ID: <5931@allegra.UUCP>
Date: Tue, 18-Mar-86 18:05:16 EST
Article-I.D.: allegra.5931
Posted: Tue Mar 18 18:05:16 1986
Date-Received: Wed, 19-Mar-86 05:31:39 EST
References: <1738@decwrl.DEC.COM>
Reply-To: dsf@allegra.UUCP (David Fox)
Organization: AT&T Bell Laboratories, Murray Hill
Lines: 23
Summary: 

>>Someone mentioned that the stock market is just a present value machine
>>This can't be totally true...
>Wrong. The price of a share of stock is the net present value of the
>company divided by the number of shares outstanding...

If this were the case stock prices could not jump on good rumors nor
plummet on bad rumors.  Actually, the price of a share of stock is
always whatever price one person is willing to buy at and and another is
willing to sell at.  This is to say that the stock market is a perceived
value machine.  The present value of the company only influences the
price of the stock insofar as it influences the buyer's and seller's
awareness.  Other factors which influence the price of a stock are:

	- The prospects of the company
	- The prospects of the economy
	- The health of the president (of the United States)
	- The adjectives used most recently in news articles about the company
	- The opinion of Adam Smith
	- The weather
	- The phase of the moon
	- ...

Well, that's my opinion, anyway.