Other events such as a successful drug trial, or lawsuit alleging safety problems for a vehicle affect only the specific firms that stand to lose or gain. The first source of risk is called systematic or undiversifiable , the second idiosyncratic or diversifiable .An important insight in the economics of finance is that diversifiable risk is essentially irrelevant in the valuation of securities, because investors can almost eliminate it by constructing portfolios that contain a large number of assets, each of which has a very small weight.
So for any given beliefs about expected future earnings, share values will be higher for companies with lower market capitalization rates.The share price computed from such considerations anticipated future earnings and the level of systematic risk is sometimes called the fundamental value of a share or security. Many institutional investors, including actively managed mutual funds and some hedge funds, adopt trading strategies based on buying assets that they perceive to be priced below their fundamental values, and selling those that are overpriced relative to fundamentals.
These words have become popular. I don't think they have any meaning & It's easy to say prices went down, it must have been a bubble, after the fact. I think most bubbles are twenty-twenty hindsight. Now after the fact you always find people who said before the fact that prices are too high. People are always saying that prices are too high. When they turn out to be right, we anoint them. When they turn out to be wrong, we ignore them. They are typically right and wrong about half the time.
Furthermore, since funding frictions limit arbitrage activity, the fact that you can't make money does not imply that the price is right'.Shiller has argued that relatively simple and publicly observable statistics, such as the ratio of stock prices to earnings per share, can be used to identify bubbles as they form. Leaning against the wind by buying assets that are cheap based on this criterion, and selling those that are dear, can result in losses in the short run, but long-term gains that, in Shiller's view, exceed the returns to be made by simply investing in a diversified basket of securities with similar risk attributes.
Economic rents and rent-seekers often have a bad name in economics. People disapprove because they think about rents as those arising from government-created monopolies (taxi licenses, intellectual property rights) or privately created monopolies. These rents indicate that the good or service will be sold at a price exceeding its marginal cost, and so the markets for these goods are not Pareto efficient.Statistiky: Napsal od Zara Josh — sob 23. led 2021 8:40:14
]]>