Mepci. Photograph: Since the beginning of 1999, the stock price has declined by over 50%. During that same time frame, the SE grew by 50%.
My illustration above is a photograph of one period in time which doesn't tell the entire picture. However, if it were the only photograph you had of Dell's performance over the past two years would you not conclude that the decline in stock price was unjustified relative to the growth in SE?
If I can make frivilous comparisons of SE to stock price over a two year period, don't you think one can make a frivilous comparison of SE to a stock price over any singular quarterly, or combined sequential quarterly, period?
The relative growth or decline of the SE is but one measurement.
SE is a relative value which can be reflected as quotient to RE, but, it can also be a value that is represented independent of projected earnings and growth.
Maybe you can show me where SE, as an independent variable, is a relatively strong predictor of future stock price performance (dependent variable). If your goal to to predict the movement of a stock price, wouldn't you want to utilize the best predictable measures instead one that is relatively benign (I suspect that the coefficient of SE to stock price is a relatively weak coefficient)?
If SE, then, is not a relatively strong predictor of the movement of a stock price, it seems to me that it serves little more than as an interesting topic of conversation as it relates to management pork, or lack of it. |
