We all know that stock prices are hard to predict. However, we don't have a clear understanding of the factors that produce fluctuations in stock prices. This study found that the rapid growth in US stock prices had very little to do with asset price models that are favored by the finance industry. Most of the growth in stock prices since 1980 has been due to the redistribution of income from wage earners to shareholders. Dividend growth is a function of lower wage growth. Moreover, most of the redistribution of income from wage earners to shareholders has already occurred. US stock price growth will not duplicate the growth rate since 1980 because the rate of income redistribution from wage earners to shareholders may have reached an upper limit.
This study is bound to raise lots of questions about asset pricing models, and it should get lots of attention from investors and defenders of the asset pricing models in the finance industry.