Expectations and the Stock Market

"A well-functioning stock market will have unpredictable movements in stock prices." That quote from Oliver Blanchard's Macroeconomics, 2nd edition. After reading, A Random Walk Down Wall Street, I firmly believe in efficient markets. I don't believe that the stock market should be taught in high school as part of an economics class as students often use the closing price as the purchase price. This week, I have an interview with Mark Lofgren, Lofgren Investments, to discuss technical trading using Point and Figure charts. In this blog, I want to analyze HON Industries, HNI, from a fundamental view.
Using data from the MSN homepage, the closing price of HNI was $14.89 with the stock paying $0.215 quarterly dividends for a total dividend of $0.86 yearly. Assume that investors consider the return on bonds when investing in the stock market, then the arbitrage condition would be: $PV = (.89/1.0175) + (15/1.075)or $15.61. I used the 12-month CD rate from First National Bank of Muscatine and calculated the present value of the future payments. My calculations show that if the expected price is $15, then the stock is a value at $14.89.
I will meet with Mr. Lofgren on Tuesday and apply Point and Figure analysis to see if the value of HNI goes up this week to reflect future earnings.