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From: jwp@uwmacc.UUCP
Newsgroups: net.invest
Subject: Re: Stock market is NOT a present value machine
Message-ID: <2041@uwmacc.UUCP>
Date: Tue, 18-Mar-86 18:43:03 EST
Article-I.D.: uwmacc.2041
Posted: Tue Mar 18 18:43:03 1986
Date-Received: Sun, 30-Mar-86 06:59:34 EST
References: <2023@uwmacc.UUCP> <4313@dartvax.UUCP>
Reply-To: jwp@uwmacc.UUCP (Jeffrey W Percival)
Distribution: net
Organization: UWisconsin-Madison Academic Comp Center
Lines: 16
Keywords: You are ignoring the discount rate

What I was mostly getting at was this (and I'll phrase it as a question):

Are there at least two companies on the NYSE with the same expected earnings
(over some reasonable time) with the same beta, with the same everything
else, except that they sell at different prices?  I am shooting from the
hip on this one, but I would be surprised if something unrelated to
the present value calculation (like demand, or trendiness) was not important
in setting the price of a stock.  Stock prices are set by people, not
computers.  See what I'm getting at?  Is every number published in the
NYSE section of the WSJ the result of a numerical calculation of present
value, based on reasoned and researched values of expected periodic payments
and a discount rate based on solid research by knowledgeable investigators?

By the way, what's the "N" in the "NPV" mentioned in an earlier article?
-- 
	Jeff Percival ...!uwvax!uwmacc!jwp