Forecasting share prices now calls for a combined approach – Natixis Equities Markets Banks
market index target. The fundamental approach and the portfolio rebalancing approach. Strategists at Natixis combine these two approaches to define an overall approach to share prices.“The fundamentalist approach to determining share prices simply says that share prices must converge towards their fundamental value, which is the discounted sum of future dividends.
“When we combine both approaches, we find that the equity risk premium decreases as the proportion of money and bonds in wealth increases. The idea is simple: if the proportion of money in wealth increases, portfolio rebalancing leads share prices to rise above their fundamental value.”Information on these pages contains forward-looking statements that involve risks and uncertainties.
France Dernières Nouvelles, France Actualités
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