EconAir

    WHY STOCK PRICES GO UP   The movement of a stock index such as the S&P 500 or an individual stock depends on two things:   Earnings per share (EPS) and changes in EPS. Stock price/earnings per share ratio (PE ratio) and changes in the PE ratio.   If the PE ratio stays the same, an increase in EPS leads to an increase in the stock price. The same is true of a stock index. Rising EPS combined with a rising PE ratio is often the reason why a stock goes up more than the average stock.   Well, that was easy. Well, not really.   The stock market is “forward-looking,” that is, it tries to anticipate changes, especially changes in EPS and the PE ratio. There is a great amount of forecasting. But since the forecasted changes are in the future, they are inherently uncertain. The forecasts of some companies’ EPS are more uncertain than others. Some are very uncertain. For example, the future sales and earnings of a small biotech company may depend on the ...

    Full disclosure.    I’m a retired professor of Economics.  I was a full-time professor but also taught as an adjunct at other colleges. I taught both traditional age day students and adult night students. I designed and taught online courses. I was on my college’s budget committee for many years and twice served on the accreditation review committee.   Before becoming a professor, I was an economist and strategic planning manager at three large corporations, a consultant to small businesses, and ran a small company. I’ve been on the boards of five nonprofit organizations.   What Does Your Tuition Buy?   There is a private college near me that charges full-time students tuition an average of $40,000 a year (after discounts off of list price). About $4,000 a course.  The professor is paid about $8,000 to teach a course (half that if the professor is an adjunct).  Assuming 20 students in the course, each student is paying...