The equity allocation approach to future investment returns
For a different perspective on stock market valuation, read the following posts from Philosophical Economics:
The Single Greatest Predictor of Future Stock Market Returns
Valuation and Stock Market Returns: Adventures in Curve Fitting
a) According to the first post, what factors are responsible for the total investment returns from buying a stock? 3 marks
b) Explain the relationship between equity asset supply and future investment returns. 3 marks
c) According to the second post, why is the valuation approach to estimating future investment returns flawed? 3 marks
6. Putting it all together
Based on your readings from this assignment, evaluate the different approaches to stock market valuation. What do you conclude? 10 marks