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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 71.08

+0.1%

Nov 7 9:30 AM EST

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To: Tom D who wrote (43352)	11/12/2000 3:50:07 PM
From: John Malloy	Read Replies (1) of 77397

<What is the formula for the relationship?> The NASDAQ correlation is based on quarterly data from 1985 through the second quarter of 2000. The formula is: ln(NASDAQ) = 6.7355 + 4.2896 ln(Nominal GDP) R squared for this correlation is 0.9835, the standard deviation is 0.0677. Statisticians normally require that the t test for each coefficient be greater than 2 before you can claim that that coefficient is really different than zero. The t value for the GDP coefficient is 13.5. The correlation says that the NASDAQ has been growing 4.3 times faster than nominal GDP. I normally include the natural log of the interest rate on long-term governments in these correlations. In the case of the NASDAQ correlation the t test for the interest rate coefficient was only 0.08. That means the interest rate did not have a statistically significant effect on the NASDAQ over the time interval I tested. John Malloy

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