Stock image
Definition and current value of the image
The stock image is a key parameter used in the "behavioral pricing model". This stock valuation model, created by is related to behavioral finance.
The Image of a stock is a coefficient that is derived from its stockmarket price.
The current value of the image (I), is the stock price (P) divided by the stock's Estimated Economic Value (EEV).
I = P / EEV.
- EEV takes into accounts the economic fundamentals and prospects of the firm.
- I quantifies the market sentiment and behavior towards the stock.
Image bracket, stock profile
The stock image coefficient varies in time inside a bracket specific to the stock. Stocks with similar properties might have similar brackets, thus finding the "stock profile" (stock behavior family : glamour, defensive, cyclical, etc.) is important. We can have, it is purely indicative,
- a variation range (.3 - .8) for a very low profile stock
- a variation range (1.2 - 3.0) for a very high profile stock.
The lowest value in the range would be reached in a very bearish period and the higher one in a very bullish one.
Potential price modelling
This stock image range can thus be used to estimate extreme potential stock prices (behavioral pricing model). This is one of the tools of behavioral analysis (as compared with fundamental analysis, technical analysis, quantitative analysis...).
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