12/16/08

Paul's Market Model

August, 2006 Model Valuation:  1437 pts

October, 2006 Model Valuation:  1427 pts

August S&P 500 Index is valued at a level  0.7% higher than the historical data used for this model would support.  This is within the error of the model.  Error in the model is 6.9%, ± 5.8% (1 sigma)

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Paul's stock market model uses historical data (from 1966 to 1994) to create an empirical model of current market valuation.  Multiple non-linear regression of historical data was performed using predictor factors such as interest rates, disposable personal income (normalized to the consumer price index), unemployment ratio, and stock market trading volume.  It's at least as good as a dart board.