Talk:Gordon model

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[edit] aplicability

I think the last edit confuses the role of models in financial markets. Every model always has some place where it does not apply, but they can still help sort out general relations between "causes" and "effects". The current edit seems to say "There are some places where this model is difficult to apply, so we should throw the whole thing out!" Baby with the bathwater. Smallbones 19:08, 15 October 2006 (UTC)

Tend to agree. I find it useful for first level approximations particularly when the market has not yet made any decisions on the stock or the business is not on the sharemarket. BernardZ 21:13, 29 December 2006 (UTC)

The forumula here is wrong. P = D/k-g for single stage. 68.251.254.187 09:16, 21 March 2007 (UTC)mj

I think it is not wrong, but used slightly different assumptions. I have added something to explain the difference.--Chakreshsinghai (talk) 07:30, 20 January 2008 (UTC)

[edit] In practice

I want some studies first before I accept this point

d) By watching the reaction of a stock's price to earnings announcements that reflect growth rates that differ from the projected rates, it can be determined that the stock price does NOT fall 50% when only 6% growth was realized, instead of 7%. So it appears that the market is not using this model, it is dangerous to take extreme positions based upon it.

The first thought that springs to mind is that the market may have taken into account already that the projected rate is not going to be reached. BernardZ 03:45, 22 January 2007 (UTC)

[edit] Examples

Needs some good examples.--Chakreshsinghai (talk) 07:28, 20 January 2008 (UTC)

I just want to know the logic behind this (k-g), means subtraction of growth rate from rquired rate of return. Please help. —Preceding unsigned comment added by 202.125.158.230 (talk) 13:27, 1 April 2008 (UTC)