RT Journal Article
SR Electronic
T1 Are High Stock Market Prices Justified?
JF The Journal of Investing
FD Institutional Investor Journals
SP 67
OP 73
DO 10.3905/joi.2004.450758
VO 13
IS 4
A1 Maria E. de Boyrie
A1 Simon J. Pak
A1 William W. Welch
YR 2004
UL https://pm-research.com/content/13/4/67.abstract
AB To justify high market prices does not require a radical departure from the traditional valuation model. Extraordinarily high market prices relative to current cash flow can be justified by the discounted cash flow model if both the assumptions of the combination of high supernormal growth rate of cash flows and the length of time supernormal growth rates persist remain unspecified and unquestioned. The model here can be used to analyze high market valuations in terms of the time supernormal growth must last to justify these prices at any given level of growth rate.