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Re: Foolish economic girly-man
Old 09-04-2004, 10:53 AM   #61
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Re: Foolish economic girly-man

OK Wab, I give up on using earnings growth as a
proxy for dividend growth. Thanks for your research.

I checked the link you provided above. It states that
real dividend growth is roughly 2-3% per year. If
we use 2.5% real then the Gordon model projects
1.56% + 2.5% = 4.06% real for TSM, or about 7%
if you add back in inflation at 3%. The earnings
model cited in your link projects 4.7% real or about
7.7% with inflation. Both numbers suck but we have
to live with them, I suppose.

The horse is dead now as far as I am concerned.

Thanks again!

Charlie
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Re: Foolish economic girly-man
Old 09-04-2004, 12:33 PM   #62
 
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Re: Foolish economic girly-man

Quote:
As far as mining, thats the beauty of the gordon equation. *The inputs are all real numbers. *Over decade long periods of time its ability to predict returns is quite solid.

Its simply earnings and dividends. *Theres no ability to mine anything, exclude anything, or enhance anything. *Unless all the companies in the index being analyzed are fudging their earnings.

TH,

I think I'm gonna take a few swings at this dead horse!

If you have been following this thread, it seems that there is agreement on the Equation but not the numbers that go into them

The Answers vary so wildly, I have no idea what to believe.

After reading this thread what would calculate now
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Re: Foolish economic girly-man
Old 09-04-2004, 02:58 PM   #63
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Re: Foolish economic girly-man

This is a worthy read. Guy should have pulled this off his web site.

Some economist in 1997 predicting the future returns of the stock market over a 5-30 year period, using "normal" p/e's and whatnot.

http://sd.znet.com/~schester/financi...urn_sp500.html

He laid out several scenarios from "most optimistic" to "pessimistic".

REALLY interesting read...
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Re: Foolish economic girly-man
Old 09-04-2004, 08:05 PM   #64
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Re: Foolish economic girly-man

For the record, the author of the link provided by TH
published the article on Feb 3, 1977. His expected
inflation adjusted average annual return was -8%
the optimistic was -5% to 1% and the pessimistic was
-18% for the next 5 years.

The actual average annual return for the 5 year period
was 12.4%. If you assume an average inflation of 3%
over the period, the inflation adjusted average return
was 9.4%.

The really interesting thing about the article was how
wrong he was!! I agree with TH that he should have pulled this off his website.

Cheers,

Charlie
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Re: Foolish economic girly-man
Old 09-04-2004, 10:23 PM   #65
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Re: Foolish economic girly-man

1997, not 1977!

What I found to be ironic is his methodology and measurements were all made using sound economic calculations and reasonable historic valuations and growth numbers.

Which means that either "its all different now" or that we ended up valued way higher than we should be.

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