{"id":2001871,"date":"2014-08-26T11:31:44","date_gmt":"2014-08-26T06:01:44","guid":{"rendered":"http:\/\/stockviz.biz\/index.php\/?p=2001871"},"modified":"2014-09-09T11:53:03","modified_gmt":"2014-09-09T06:23:03","slug":"consumption-based-asset-pricing-model","status":"publish","type":"post","link":"https:\/\/stockviz.biz\/index.php\/2014\/08\/26\/consumption-based-asset-pricing-model\/","title":{"rendered":"Consumption-based asset pricing model"},"content":{"rendered":"

Most theories of how the stock market works are based on the idea that investors sit around thinking about what a stock might be worth. Together, by buying and selling stock, Mr. Market comes to some conclusion.<\/p>\n

But the consumption-based asset pricing model says that\u2019s not the way it works at all. Investors, actually, spend very little time thinking about whether a company\u2019s shares are undervalued or overvalued. Instead, most investors make their investment decisions based on how much money they have and when they will spend it.<\/p>\n

Source:<\/strong> How market selloffs happen<\/a><\/p>\n

Origins of Stock Market Fluctuations<\/h3>\n
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  1. On a quarterly basis, risk aversion shocks explain roughly 75% of variation in the log difference of stock market wealth.<\/li>\n
  2. Over the long term, factors share shock that shifts the rewards of production between workers and shareholders plays a larger role in stock market returns.<\/li>\n
  3. By contrast, technological progress that rewards both workers and shareholders plays a smaller role in stock market fluctuations.<\/li>\n<\/ol>\n

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