IDEAS home Printed from https://ideas.repec.org/a/wsi/ijmpcx/v14y2003i10ns0129183103005510.html
   My bibliography  Save this article

Does The Price Multiplier Effect Also Hold For Stocks?

Author

Listed:
  • SERGEI MASLOV

    (Department of Physics, Brookhaven National Laboratory, Upton, New York 11973, USA)

  • BERTRAND M. ROEHNER

    (Institute for Theoretical and High Energy Physics, University of Paris, France)

Abstract

The price multiplier effect provides precious insight into the behavior of investors during episodes of speculative trading. It tells us that the higher the price of an asset (within a set of similar assets), the more its price is likely to increase during the upgoing phase of a speculative price peak. In short, instead of being risk averse, as is often assumed, investors rather seem to be "risk prone". While this effect is known to hold for several sorts of assets, it has not yet been possible to test it for stocks because the price of one share has no intrinsic significance, which means that one cannot say that stockAis more expensive than stockBon the basis of its price. In this paper we show that the price-dividend ratio gives a good basis for assessing the price of stocks in an intrinsic way. When this alternative measure is used instead, it turns out that the price multiplier effect also holds for stocks, at least if one concentrates on samples of companies which are sufficiently homogeneous.

Suggested Citation

  • Sergei Maslov & Bertrand M. Roehner, 2003. "Does The Price Multiplier Effect Also Hold For Stocks?," International Journal of Modern Physics C (IJMPC), World Scientific Publishing Co. Pte. Ltd., vol. 14(10), pages 1439-1451.
    • Handle: RePEc:wsi:ijmpcx:v:14:y:2003:i:10:n:s0129183103005510
    DOI: 10.1142/S0129183103005510
    as

    Download full text from publisher

    File URL: http://www.worldscientific.com/doi/abs/10.1142/S0129183103005510
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1142/S0129183103005510?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Peter Richmond & Bertrand M. Roehner, 2016. "Property bubble in Hong Kong: A predicted decade-long slump (2016-2025)," Papers 1608.03985, arXiv.org.
    2. Peter Richmond & Bertrand M. Roehner, 2017. "Property bubble in Hong Kong: A predicted decade-long slump (2016–2025)," Evolutionary and Institutional Economics Review, Springer, vol. 14(1), pages 79-99, June.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wsi:ijmpcx:v:14:y:2003:i:10:n:s0129183103005510. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Tai Tone Lim (email available below). General contact details of provider: http://www.worldscinet.com/ijmpc/ijmpc.shtml .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.