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• Modeling The Stock Market by Paul T. Holliday

  ARTICLE SYNOPSIS ...Modeling The Stock Market by Paul T. Holliday The price/earnings ratio works perfectly well-- for stocks. But, Paul Holliday points out, it doesn't work for stock indices such as the DJIA or the Standard & Poor's 500, where the effective interest rate works much better. To prove it, he's come up with a market model based on the theory that price is in proportion to earnings divided by interest rate and proceeds to demonstrate its use. The price/earnings ratio has been highly regarded as an indicator of whether the market is over- or underpriced. But closer analysis reveals that for stock indi...

AUTHOR: Paul T. HollidayDATE: MAR 1992

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• Determining stock value from price and earnings by Paul T. Holliday

  ARTICLE SYNOPSIS ...Determining stock value from price and earnings by Paul T. Holliday The value of stocks and stock indices are generally derived from such fundamentals as earnings and return on investment. The value that investors place on a stock or stock index may also be found by examining historical data. Value is a function of fundamental parameters such as earnings and interest rates, but fluctuations around the nominal value occur because investors' expectations of future earnings may be optimistic or pessimistic, thus driving the stock price above or below that nominal value. Just because a relations...

AUTHOR: Paul T. HollidayDATE: MAY 1990