The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: lano on May 19, 2014, 08:59:13 PM
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What will determine the price of a stock or a business ten years from now?
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What will determine the price of a stock or a business ten years from now?
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What will determine the price of a stock or a business ten years from now?
a stock price will ultimately be determined by whatever investors are willing to pay for it.
In a perfect market a stock's price will accurately reflect the value of the company. A company's value is the book-value of the company (how much everything the company owns is worth minus all it's debt obligations/liabilities etc.) plus an estimation of its future earnings.
In the short term a stock's price can deviate between these (become "overvalued" or "undervalued) because investors are willing to pay more or less for that company than they otherwise should. Generally this happens because of hype or fear - because we overestimate future earnings or assume challenges to the business which don't materialize. Almost always these imperfections get corrected over time.
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The same thing that determines a stock price today, just ten years in the future.
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The same thing that determines a stock price today, just ten years in the future.
+1.
Except we will all have 2 Google glasses per person (since we will have genetically grown 2nd heads) so we will be smarter and therefore markets will be perfectly efficient.