Stock market index target: How to reconcile the fundamental approach with the portfolio rebalancing approach?

There are two theories to determine a stock market index target: The fundamental approach: the share price must converge towards the discounted sum of future dividends, the discount rate being the differential between the interest rate and the growth rate plus a risk premium; The portfolio rebalancing approach: the value of equities converges towards a desired fraction of total wealth. If there is an increase in the money supply, total wealth increases and, at equilibrium, share prices rise to return the proportion of equities in wealth back to its desired level. We combine these two approaches to define an overall (fundamental and portfolio) approach to share prices.