The bottom graph in Figure 13.1 shows the actual performance of the Standard and Poor?s 500 Index for a five-year period. Two financial managers, Alpha and Beta, are contemplating this chart. Each manager?s company needs to issue new shares of common stock sometime in the next year.

Alpha: My company?s going to issue right away. The stock market cycle has obviously topped out, and the next move is almost surely down. Better to issue now and get a decent price for the shares.

Beta: You?re too nervous; we?re waiting. It?s true that the market?s been going nowhere for the past year or so, but the figure clearly shows a basic upward trend. The market?s on the way up to a new plateau. What would you say to Alpha and Beta?

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Level 220 200 180 160- 140 120E 100 80 Months Level 160 140 120 100 80 Months