Political  Calculations

We're returning to the cutting edge of the physics that describes how stock prices behave today, as we look backwards and forwards in time to sort out why the U.S. stock market is behaving as it is.

First, let's cover what's going on with the fundamental driver of stock prices: their underlying dividends per share. Our first chart shows what the dividend futures contracts reported by IndexArb indicate that investors are currently expecting to be paid out by S&P 500 companies in 2013:

S&P 500 Quarterly Dividends per Share, 2009-Q1 Through 2012-Q4, 
with Expected Future Dividends per Share Through 2013-Q4, as of 11 February 2013

Next, here's how those quarterly dividends per share translate into trailing year dividends per share, which stock prices more closely track:

S&P 500 Trailing Year Dividends per Share, 2009-Q1 Through 2012-Q4, with Expected Future Dividends per Share Through 2013-Q4, as of 11 February 2013

Political Calculations

Political Calculations is a site that develops, applies and presents both established and cutting edge theory to the topics of investing, business and economics.

Be the first to read Political Calculation's column. Sign up today and receive Townhall.com delivered each morning to your inbox.

TOWNHALL FINANCE DAILY

Get the best of Townhall Finance Daily delivered straight to your inbox

Follow Townhall Finance!