Stock Market Futures
stock market futures
Stock Market Futures Today Nasdaq futures vs fair value -29.00 GOOG AAPL PCLN
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Futures Magazine August 2005 Stock Market Seesaw $2.50 |
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Single Stock Futures Patrick Lafferty Stock Market Success Derivative Investing $7.88 |
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A View from The Street Future of the stock market Donald Regan HC DJ 1st 1972 HB $5.50 |
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Why is The Stock Market future Oriented?
Stock prices go up or down because of future events
The Stock Market and hence stocks are “future oriented” because the valuation of any asset (including stocks) is the present value of the discounted cash flows. Let me give you a simple example.
Say that you there was a company that was going to pay you a dividend of $10 next year…what would you pay today for that dividend next year? You discount back the $10 at some rate and that’s what you would pay today.
But let’s say that you just learned that the dividend to be paid next year was only going to be $5. Now the valuation today would be different.
With stocks and The Stock Market there are many different valuation techniques…but almost all are forward looking. As things change for companies, the outlooks change and thus the present value of these companies also changes.
I hope this makes sense…