Clients may have views on the near or medium term behavior of equity prices, interest rates, or commodities.
"Monetary and fiscal policy are both stimulative," he said, and "the biggest determinant of equity prices is interest rates, not earnings".
We propose a model of equity price dynamics that allows for (i) simultaneous consideration of multiple stock prices, (ii) analytical formulas for derivatives such as futures, options and bonds, and (iii) a realistic description of all of these assets.
The other is the case for investing in housing, based on the ratio of house prices to rents, much as stockmarket investors look at the ratio of equity prices to earnings.
In fact, drawn by the casino-like profits to be made in the boom, more and more small investors flocked to the thousands of brokerage houses that are now proliferating in every Chinese city in order to buy and sell while staring up at flickering electronic data boards charting the rise and fall of equity prices.
…with the ongoing extraordinarily low interest rate environment likely remaining very supportive of equity prices.
Our model also has direct implications for the level of equity prices and specific versions of the model can, in many cases, capture observed price levels.
Some observers have claimed those daily limits — 10percentt moves in either direction on a given day halt trading of a stock — are preventing some investors from de-leveraging and forestalling the natural correction of equity prices.
And that is on top of coupon income in the area of 8%–not bad in a year of falling equity prices.
Unlike Europe and the U.S., where an explosion of cross-border merger and takeover activity has been an important driver of higher equity prices, Japan has largely missed out on the party because of regulatory barriers to foreign acquisitions of Japanese companies.
