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Technology Stocks : Lucent Technologies (LU) -- Ignore unavailable to you. Want to Upgrade?

To: GVTucker who wrote (9141)	8/11/1999 3:20:00 PM
From: John Malloy	Read Replies (1) \| Respond to of 21876

"Stock price model (to use a more correct term)" Actually, a stock price, earnings, dividend, and equity/share model. "It's just that I think that you presented this model as a quantitative method of security analysis, and the price/book assumptions that are needed take this quantitative aspect away.)" By quantitative I mean the model produces a quantitative, dollars-and-cents estimate of what any stock is worth. Certainly forecasting is subjective. You begin with the firm's historical performance -- its growth rate, the return on equity it earns, and the price/book ratio investors have been willing to pay. That gives you a starting point. Then you add what you know about the future of the industry and any recent developments that affect the firm. Then you forecast. Obviously, you use your best judgment. I forecast by drawing free-hand curves because they offer complete flexibility in describing how I think those key parameters will behave in the future. "you could adjust the curve only slightly and change the whole analysis" If I adjust the curve slightly, the calculated value of the stock also changes, but only slightly. Slight changes do not change the whole analysis. John Malloy