Comments on: The Loss of Stock Market Wealth: The Individual versus the Nation http://taxesandbudget-blog.ncpa.org/the-loss-of-stock-market-wealth-the-individual-versus-the-nation/ Insights on Taxes, Economic Policy, Federal Budget | NCPA Fri, 20 Nov 2009 19:34:42 -0600 http://wordpress.org/?v=2.8.4 hourly 1 By: Bret http://taxesandbudget-blog.ncpa.org/the-loss-of-stock-market-wealth-the-individual-versus-the-nation/comment-page-1/#comment-7141 Bret Thu, 23 Oct 2008 16:15:49 +0000 http://www.bob-mcteer-blog.com/?p=136#comment-7141 You left out the time component, perhaps on purpose for simplification in order to attain better readership understanding, but unfortunately, that changes the conclusions. Since the price of a share of stock should in theory be more or less the Net Present Value of all future returns, considering only current productive GDP and current value of the economy is incorrect. The drop in prices could well be due to the fact that future earning potential for these companies has been seriously damaged. In fact, that earning potential could easily be damaged to the tune of 40%. Why not? You left out the time component, perhaps on purpose for simplification in order to attain better readership understanding, but unfortunately, that changes the conclusions.

Since the price of a share of stock should in theory be more or less the Net Present Value of all future returns, considering only current productive GDP and current value of the economy is incorrect. The drop in prices could well be due to the fact that future earning potential for these companies has been seriously damaged. In fact, that earning potential could easily be damaged to the tune of 40%. Why not?

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