L001 - HOW TO PREDICT FUTURE STOCK PRICES

Friday, 02 March 2018 

               The basic principle in stock market is that, a stock price is directly proportional to the earning of the underlying company and a company will earn more if it survives longer in the future. So if you are able to predict the future life expectancy of a company you can predict its stock price too. But the question is that how to predict the future life expectancy of a company?

              The answer is here by using “The Lindy Effect” which states that the older the company the more is its future life expectancy. It means for example Nestle is around 150 years old so there is very high probability that it can survive for next 150 years and if its growth is assumed to be 10% for the next 150 years then its price may reach to minimum

Like that you can find future life expectancy for any old company or technology or thing.

The list of companies which are having roots older than 1947 are given below

1	BBTC	21	HUL
2	NESTLE	22	EVEREST
3	BRITANIA	23	CIPLA
4	CENTURY TEXTILE	24	ACC
5	SHALIMAR PAINTS	25	GODREY PHILLIPS
6	INDIAN HOTEL	26	COLPAL
7	PHEONIX MILL	27	CROMPTON
8	ALEMBIC PHARMA	28	TATA INVESTMENT
9	TATA STEEL	29	BAJAJ ELECTRICAL
10	ITC	30	JK LAKSHMI CEMENT
11	TVS MOTOR	31	J&K BANK
12	BIRLA CORP.	32	TATA CHEMICAL
13	NEROLAC PAINTS	33	BASF INDIA
14	BERGER PAINTS	34	RBL BANK
15	RATMOND	35	ESCORTS
16	HCC	36	BAJAJ HOLDINGS
17	VST IND	37	ASIAN PAINTS
18	ARVIND	38	M&M
19	BATA	39	WIPRO
20	TATA MOTORS

These are the companies which are 70 to 150 years old it means that you can expect them to survive for next 70 to 150 years hence you can predict their prices too for the same duration.

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- Auther                         

- Prof. Ashfaque Shaikh

- Research Analyst   

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