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From: jwp@uwmacc.UUCP (Jeffrey W Percival)
Newsgroups: net.invest
Subject: Re: Stock market a present value machine
Message-ID: <2053@uwmacc.UUCP>
Date: Sat, 22-Mar-86 16:03:33 EST
Article-I.D.: uwmacc.2053
Posted: Sat Mar 22 16:03:33 1986
Date-Received: Wed, 26-Mar-86 03:18:53 EST
References: <1738@decwrl.DEC.COM> <5931@allegra.UUCP> <2309@jhunix.UUCP>
Reply-To: jwp@uwmacc.UUCP (Jeffrey W Percival)
Organization: UWisconsin-Madison Academic Comp Center
Lines: 22

In article <2309@jhunix.UUCP> ins_aprm@jhunix.UUCP (Paul R Markowitz) writes:
>Each investor bases his decision to buy or sell based on whether he thinks his
>view of the information about a company is better than the other investors.

Not always.  What about the people who buy a stock because they think they
can sell it next week for twice the price?  No fundamental analysis here.

I'm making a pretty obvious and trivial point, but I was just
reacting to the people who were, in my opinion, attaching too much logic
to the market ("present value machine").  The Dow dropped 40 points
yesterday, and the NPV folks would have me believe that a readjustment of
the projected earnings stream of the underlying companies caused the
market to react downward.  I would claim that the market moved in a way
that was independent of the valuation of the underlying companies and
earnings streams, therefore the market is at best a profoundly defective
PV machine.

Another way to phrase it:  The Dow dropped 40 points yesterday.  Will
the NPV adherents please name the companies whose earnings projections
changed so dramatically between 3:30 and 4:00 EST?
-- 
	Jeff Percival ...!uwvax!uwmacc!jwp