Hello,
I was wondering if economists use different models to estimate the fundmental value of a company (and obviously stocks)
I am a finance major soon going to last year and as far i can see in classes , while it could be different in professional analysts, we seem to favor the scheme " create some logical scenarios based on past data or future predictions to forecast cash flows, discount it with the "proper" rate, do a sensitivity analysis and thats it"
Do people from econ background, use different tenchniques? I have read they tend to follow gdp trends and interests rates but how practical is this in pricing a stock(or maybe an acquisition) ?
It feels more relevant to explain the market trends than the pricing of a single investment
Thank you for your time
I was wondering if economists use different models to estimate the fundmental value of a company (and obviously stocks)
I am a finance major soon going to last year and as far i can see in classes , while it could be different in professional analysts, we seem to favor the scheme " create some logical scenarios based on past data or future predictions to forecast cash flows, discount it with the "proper" rate, do a sensitivity analysis and thats it"
Do people from econ background, use different tenchniques? I have read they tend to follow gdp trends and interests rates but how practical is this in pricing a stock(or maybe an acquisition) ?
It feels more relevant to explain the market trends than the pricing of a single investment
Thank you for your time