After having experience a pair of noise events in the preceding weeks, stock prices resumed following the trajectory that a forward-looking focus on the expectations associated with 2014-Q3 would place them.
At least, that much is pretty clear from our chart tracking the change in the growth rate of stock prices with respect to the expected change in the growth rate of trailing year dividends per share.
But pay attention to what that means for stock prices if investors remain focused on that particular point in the future going into summer:
Finally, because the stock prices of one year earlier provide the base reference points from which we project future stock prices in our model, our final chart shows the history of the S&P 500 with its major noise events during 2013:
It will be interesting to find out how well our echo filtering technique copes with the anniversaries of 2013's major noise events. Or if we even need to bother with it at all...
... as we'll find out which one of our two alternative future charts - the one accounting for the echo effect or the one that doesn't consider it at all - is doing a better job in anticipating the actual trajectory of stock prices outside of current day noise events.
Welcome to the blogosphere's toolchest! Here, unlike other blogs dedicated to analyzing current events, we create easy-to-use, simple tools to do the math related to them so you can get in on the action too! If you would like to learn more about these tools, or if you would like to contribute ideas to develop for this blog, please e-mail us at:
ironman at politicalcalculations
Thanks in advance!
Closing values for previous trading day.
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