In the new episode of The Inside View, your editor begins a series of discussions on the various techniques and methodologies for portfolio management. Today’s show focuses on the Gordon equation, one of the building blocks for estimating prospective equity market returns.
The Gordon equation is one of several applications used for building the model portfolios in The Beta Investment Report. But like any forecasting tool, investors need to be cautious and understand how the Gordon equation is designed. Certainly the Gordon equation isn’t flawless when it comes to divining the future, particularly in the short run. But used prudently, in context with other forecasting tools, it provides a good start for thinking about the investment outlook and designing an asset allocation plan.
What’s the Gordon equation is telling us these days? Tune in for the answer…
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