wabmester
Thinks s/he gets paid by the post
- Joined
- Dec 6, 2003
- Messages
- 4,459
Charlie, I re-read that section of Bernstein, and I'm convinced that the Gordon Equation is useless, that Bernstein is confused, and that we're both confused
Berstein states in several places that Gordon is only useful for predicting long-term returns. He gives an example based on long-term dividend and growth averages.
He then gives examples using current dividend rates and recent growth to predict future returns, but he insists that you can't use Gordon to predict short-term (e.g., annual) returns, so I have no idea why he's feeding short-term numbers into the equation.
Where you and I differ is that you use short-term values for both terms, and I use a long-term growth term to extrapolate current yields to predicted long-term, but frankly none of them seem very useful or accurate.
We all concede that Gordon doesn't consider P/E growth and that it can't predict changes in dividend (or earnings, or economic) growth, so ... what were we discussing?
Berstein states in several places that Gordon is only useful for predicting long-term returns. He gives an example based on long-term dividend and growth averages.
He then gives examples using current dividend rates and recent growth to predict future returns, but he insists that you can't use Gordon to predict short-term (e.g., annual) returns, so I have no idea why he's feeding short-term numbers into the equation.
Where you and I differ is that you use short-term values for both terms, and I use a long-term growth term to extrapolate current yields to predicted long-term, but frankly none of them seem very useful or accurate.
We all concede that Gordon doesn't consider P/E growth and that it can't predict changes in dividend (or earnings, or economic) growth, so ... what were we discussing?