Category: Stock Market Valuations
The analysis published under this category are as follows.
Sunday, January 16, 2022
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles / Stock-Markets / Stock Market Valuations
By: Nadeem_Walayat
Just over a week ago EV stock Rivian IPO' d, a stock that virtually delivers nothing in terms of revenues is now valued at $110 billion! The company so far has delivered about 200 cars and their expectations are to deliver about 55,000 cars by the end of 2023.
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Monday, November 15, 2021
Stock Market Inflation Consequences - S&P Dividend Yield vs CPI / Stock-Markets / Stock Market Valuations
By: Nadeem_Walayat
Here's another indicator to pile on top of a mountain of indicators that I have been covering over the past few months all flashing RED . The S&P real terms dividend yield is now LESS than at the dot com bubble peak! In fact one would need to go back to the depths of the early 1980s' inflationary depression to reach such poor returns.
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Saturday, May 22, 2021
AI Tech Stocks Buying Levels, Expensive / Cheap (EC) Indicator and Buy % Ratings Explained / Companies / Stock Market Valuations
By: Nadeem_Walayat
The stock market is now moving into my forecast time window for a correction to begin of approx 10% decline as illustrated by my trend forecast graph.
Firstly What are Buying Levels?
Buying levels are high probability technical levels that a stock 'could' trade down to during a correction i.e. an achievable technical chart level that could be used to for instance to put in buy limit orders at just above the buying level if one is eager to accumulate more stock into any particular company as an example last September the Buying Level for Google (Alphabet) was $1395, so a limit order at $1395 or higher would be the objective depending on how eager one is to gain exposure to Google i.e. If I really wanted to buy more Google at the time then the limit order would be OVER $1400 as stocks tend to find support at round numbers, whilst if I was less inclined to buy Google then the Buying level would be at $1395, lower than that and there is a decreasing probability that a buy will be triggered.
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Wednesday, February 03, 2021
The Wolf is At the Door (Or How to Protect Yourself Against This Bubble) / Stock-Markets / Stock Market Valuations
By: Paul_Lamont
More than1 Trillion shares traded in speculative over-the-counter (pink sheets) stocks in December. In the options market, option trading by retail investors registered 46 million contracts in one day in early January. Reporters forBloomberg described events as "another day of euphoria" in "Day-Trader Heaven." Non-profitable tech companies have gone bonkers (see below).
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Thursday, December 31, 2020
Nadeem Walayats AI Stocks EC and Buying Levels Explained / Companies / Stock Market Valuations
By: Nadeem_Walayat
My last look at AI stocks buying levels early September had some of the must own AI stocks trading at ridiculously high valuations for instance Amazon was trading on an EC of 148 against a target maximum of 100! Which prompted me to HIT the SELL button on over 50% of my holdings despite the promise of huge gains in revenues as the pandemic sales and profits came in.
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Wednesday, March 27, 2019
How Market Valuation Affects Future Stock Returns / Stock-Markets / Stock Market Valuations
By: John_Mauldin
The price/earnings ratio (P/E) has a multiplier effect on stock returns. Over 10–20 years, it can dramatically increase or decrease your total return.In the secular bear market of the 1960s and ‘70s, shrinking P/E ate away almost all the return from earnings growth and dividend yield.
In the 1980s and ‘90s, rising P/E more than doubled the return for investors.
But P/E’s effect goes beyond earnings and capital gains. It has a big effect on dividend yield, too.
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Friday, March 22, 2019
Your Future Stock Returns Might Unpleasantly Surprise You / Stock-Markets / Stock Market Valuations
By: John_Mauldin
Every investor knows that “past performance is not indicative of future results.” Yet many embrace century-long averages as a reasonable guess for future returns.
Back in the late 1990s, we were told that the long-term average return (~10%) was a reasonable long-term assumption. Instead, the S&P 500 Index has only gained about 3% annually since 1999—just over half the historical average.
This forced Baby Boomers to work longer and harder to retire, as well as save more of their income.
Thursday, March 08, 2018
It’s an Ugly Picture If You Are Looking for Value in Stocks / Stock-Markets / Stock Market Valuations
By: John_Mauldin
By Patrick Watson : The long-awaited Strategic Investment Conference 2018 kicked off with a keynote from David Rosenberg of Gluskin Sheff titled, “Year of the Dog: Will It Bark or Bite?” (Spoiler: The answer is “bite.”)
Rosenberg began by running through a list of his own metrics: forward P/E, price/sales, price/book value, enterprise value/EBITDA. All of them point to record-high valuations.
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Thursday, June 04, 2015
Stock Market Valuations - Don’t Fight the Tape or the Fed / Stock-Markets / Stock Market Valuations
By: John_Mauldin
A recurring theme in my letters is the various ways in which we can go about determining valuations for stocks and other investments. My good friend Steve Blumenthal has gathered a number of charts from various authorities showing different ways to look at valuations for today’s US stock market. He topped it off with some very good estimates of forward-looking returns on total US equity portfolios. He is not arguing to get out but rather to be aware of where we are and to temper your expectations for the future. Steve writes in an easy, fluid style that I think you will enjoy as this week’s Outside the Box.
Tuesday, April 28, 2015
Stock Market Valuations - Maybe I am Crazy / Stock-Markets / Stock Market Valuations
By: Mike_Shedlock
Relative vs. Absolute Value
As I watch valuations on stocks soar higher and higher into the stratosphere, I keep asking "where is the value?"
The problem for most is confusing "relative" value vs. absolute value. Stocks may be "cheap vs. bonds" but what does that matter if bonds are ridiculously overpriced?
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Wednesday, March 25, 2015
Danger Will Robinson - Stock Market Crash Warning / Stock-Markets / Stock Market Valuations
By: James_Quinn
It’s funny how the truth sometimes leaks out from the government. I’m guessing that Mr. Ted Berg will not be working for the Office of Financial Research much longer. This new agency was created by the Dodd Frank Law and is supposed to protect consumers from the evil Wall Street banks. But we all know the evil Wall Street banks wrote the bill, have gutted the major provisions, have captured all the regulatory agencies, own the Federal Reserve, and control all the politicians in Washington D.C. So, when an honest government analyst writes an honest truthful report that unequivocally proves the stock market is grossly overvalued and headed for a crash, the Wall Street banking cabal will surely call the top government apparatchiks to voice their displeasure. Truth is treason in an empire of lies.
Monday, July 21, 2014
Why the Stock Market Is STILL Cheap / Stock-Markets / Stock Market Valuations
By: DailyWealth
Dr. Steve Sjuggerud writes: People think U.S. stocks are expensive...
Yes, they have gone up a lot... But according to our favorite measure of stock market value, stocks are NOT expensive.
It's a simple indicator, but it encompasses the important stuff. And right now, it's telling us you could make double-digit profits in stocks over the next 12 months...
Sunday, May 11, 2014
Are Stock Market Valuations Really Too High? / Stock-Markets / Stock Market Valuations
By: John_Mauldin
The older I get and the more I research and study, the more convinced I become that one of the more important traits of a good investor or businessman is not simply to come up with the right answer but to be able to ask the right question. The questions we ask often reveal the biases in our thinking, and we are all prone to what behavioral psychologists call confirmation bias: we tend to look for (and thus to see, and to ask about) things that confirm our current thinking.
I try to spend a significant part of my time researching and thinking about things that will tell me why my current belief system is wrong, testing my opinions against the ideas of others, some of whom are genuine outliers.
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Saturday, April 19, 2014
Stock Market SPX Topping Valuations / Stock-Markets / Stock Market Valuations
By: Zeal_LLC
The lofty stock markets are starting to wobble, with selloffs’ frequency and sharpness increasing. The dominant reason the Fed’s stock levitation is running out of steam is severe overvaluation. Stocks are just far too expensive today compared to historic precedent, a dangerous state seen when bull markets are topping. Rampant overvaluation is a glaring warning sign to investors that selling is just beginning.
Saturday, April 05, 2014
Stocks Bulls vs. Bears: Some Profit Margin Stories Are Better Than Others / Stock-Markets / Stock Market Valuations
By: F_F_Wiley
[M]argins have been rising smartly–faster than Greenspan can ever recall. His only explanation: productivity… Greenspan argues that the U.S. is undergoing a productivity revolution not seen since early this century… In the longer term, he’s betting that as the world moves into the 21st century and the NAlan Greenspan’s Brave New Worldew Economy takes root, more of the old economic rules will fall apart. - From “,” Business Week, July 13, 1997
Monday, January 13, 2014
Stock Market Bubble Valuation - Hear the Bear Growl? / Stock-Markets / Stock Market Valuations
By: LewRockwell
Read full article... Read full article...[S]tock prices have risen pretty robustly. But I think that if you look at traditional valuation measures, the kind of things that we monitor, akin to price-equity ratios, you would not see stock prices in territory that suggests bubble-like conditions.
- Janet Yellen, responding to a question in November’s nomination hearing
Saturday, November 02, 2013
Explanation for the Upward Tilt of US stock PE Ratios / Stock-Markets / Stock Market Valuations
By: PhilStockWorld
Courtesy of Joshua M Brown writes: One of my whip-smart readers, Cathy Leow, wrote in a really interesting take to explain the gradual and undeniable upward tilt for the PE ratios of US stocks in recent years. Cathy was formerly an economist and then a grains trader, she's been analyzing and investing in the equity markets since 2005.
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Saturday, August 17, 2013
The Truth About Stocks Today / Companies / Stock Market Valuations
By: DailyWealth
Steve Sjuggerud writes: "Stocks are up over 100% since 2009. They're way too expensive now... You shouldn't buy."
I hear this all the time. Frankly, I've heard it so much, I'm tired of hearing it... It's just so plain wrong!
It's true that stocks are up over 100% since 2009. But that doesn't mean stocks are too expensive...
Friday, August 02, 2013
Stock Market Valuation Very Expensive! / Stock-Markets / Stock Market Valuations
By: PhilStockWorld
Courtesy of Doug Short: Here is a summary of the four market valuation indicators I usually update during the first days of the month. The four indicators are:
● The Crestmont Research P/E Ratio (more)
● The cyclical P/E ratio using the trailing10-year earnings as the divisor
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Monday, June 24, 2013
S&P 500 P/E Ratio versus 10-Yr Treasury Interest Rates From 1957 / Stock-Markets / Stock Market Valuations
By: Richard_Shaw
In our recent post, we used historical mean reversion to estimate the Fed’s target rate for 10-year Treasuries, 30-year mortgages, and Baa corporate bonds, based on the Fed’s 2% inflation target. One commenter wrote to us and asked what that implied for the S&P 500 P/E ratios.
We looked at the monthly history of trailing P/E ratios for the S&P 500 since its inception in March 1957, and conclude that there is no useful rule of thumb about P/E ratios and interest rates in the interest rate range from 4% to 6%. At much higher interest rates, P/E’s do become depressed; which relates the to business stifling aspects of very high rates. However, the 4% to 6% range, which is what we may face in next year or two, has not historically been a problem.
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Wednesday, May 29, 2013
The Stock Market is Very Expensive! / Stock-Markets / Stock Market Valuations
By: John_Mauldin
Vitaliy Katsenelson is a modern-day American success story, the kind we need more of. He grew up in Murmansk, in the extreme northwest corner of Russia, north of the Arctic Circle and close to the Finnish border. He says he barely escaped a career in the engine rooms of Russian Navy vessels when his family wrangled a visa to emigrate to the US in 1991.
He finished high school here, knocked out a BA in finance at the University of Colorado at Denver, and followed up with an MS in finance and his CFA. At that point, a local Denver firm, Investment Management Associates, snapped him up; and before long he was one of the two principals in the company, alongside Michael Conn.
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Saturday, May 11, 2013
If You're Not Buying Stocks Yet, You Need to See These Charts / Stock-Markets / Stock Market Valuations
By: DailyWealth
Dr. David Eifrig writes: Last month, I ran through a set of figures that cover a huge concern for retirees.
It's vitally important information that affects nearly every dollar you have invested... yet most of what you hear about this idea is "bunk."
I'm talking about the concern that the U.S. economy is "running off the rails"... that we are in a recession... or worse, a depression.
Thursday, November 01, 2012
The Dangers of Holding Overvalued Stocks / Companies / Stock Market Valuations
By: Charles_Carnevale
We often write about valuation because we believe it is one of the most misunderstood aspects of investing in common stocks. This causes many people to hold what we consider to be unjustified biases that are based primarily on price action. For example, the concept of the lost decade, which many almost gleefully point to as evidence validating that stocks are poor investments, fail to recognize that the true culprit was overvaluation during the appropriately labeled “irrational exuberance” days.
Thursday, October 25, 2012
Based on Real Math The SP 500 Stock Market Index Is Fairly Valued / Stock-Markets / Stock Market Valuations
By: Charles_Carnevale
As investors, we do not believe in forecasting stock markets or stock prices on individual stocks. Instead, we approach investing as the process of calculating intrinsic value based on fundamentals. To us, the most important fundamental to be considered when evaluating the True Worth™ of a market or a common stock is earnings. Therefore, it's important that the reader understands that this article is offered as a mathematical calculation of what the S&P 500 is actually worth based on earnings. The reason we believe this to be important is because we also believe that any deviations from fair value will ultimately self-correct.
Monday, November 21, 2011
Stock Market Extreme Over Valuation Warning / Stock-Markets / Stock Market Valuations
By: EWI
This is one of our favourite charts, it depicts two different valuation measures. On X axis, we show the S&P500 annual dividend yield, and on the Y-axis the S&P Industrials' price to book value ratio. The box shows you normal valuation, at least as it was established in the 20th century. You can see that the dividend yield fluctuated from around 3% at tops in the market to 6 or 7 percent at bottoms in the market.
Tuesday, April 12, 2011
Stocks Cheap? Shiller's Cyclically Adjusted PE Ratio Approaching Peak Valuations / Stock-Markets / Stock Market Valuations
By: Trader_Mark
Most of the commentary in regards to the value of stocks looks at the 1 year trailing or forward PE ratio, and applies some sort of premium or discount to that due to interest rates. Indeed with estimated earnings in the mid $90s on the S&P 500 and record low interest rates the market looks relatively 'cheap' at around 13x end of year 2011 estimates. As always please understand the market is substantially more expensive than the raw numbers show as many companies take numerous exemptions for 'one time' expenses such as options expensing - which are of course not one time.... but Wall Street still is happy to exclude these very real costs in the game of "wink wink".
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Monday, April 11, 2011
Stock Market Valuations Forming Second Biggest Bubble in US History / Stock-Markets / Stock Market Valuations
By: Jason_Kaspar
Despite the terrible economic performance of the past ten years (both in terms of the markets and the general economy), equity valuations are now approaching the second largest bubble in United States history, surpassed only by the technology bubble. Both the cause and the potential ramifications of this development are astounding.
Wednesday, March 09, 2011
Dow Jones Stocks Index in Silver / Stock-Markets / Stock Market Valuations
By: GoldSilver
The Dow Jones Industrial Average has had tremendous nominal growth since bottoming in March of 2009. Although the Dow has risen to over 12,000 it is important for investors to keep in perspective that nominal point gains of the Dow don't necessarily mean stock investors have increased their overall wealth and purchasing power versus other asset classes.
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Monday, February 07, 2011
Stock Market Real Negative Returns for the Next Decade, Bear Market in PEs / Stock-Markets / Stock Market Valuations
By: Mike_Shedlock
Market cheerleaders keep ratcheting up expected earnings, failing to note that much of the recent earnings growth is simply not sustainable.
Reasons for Unsustainable Earnings Growth
- Much of the recent earnings growth is directly related to federal stimulus that will eventually end.
- Much of the earnings in the financial sector are a mirage, based on assets not marked-to-market and insufficient loan loss reserves. The Fed and the FASB have repeatedly postponed rules changes for the benefit of banks and other financial institutions.
- Earnings in both the financial and nonfinancial sectors have margins outside historical norms, based on very low headcounts and outsourcing.
Tuesday, December 28, 2010
Using International Valuation Standards to Determine the S&P-500 Fundamental Value / Stock-Markets / Stock Market Valuations
By: Andrew_Butter
Of late, there has been a lively debate about the “fundamental” value of all sorts of things…stock markets, real estate, gold, oil, toxic assets, and even Treasuries. Often as mot the debate is a manifestation of a newly discovered psychological disorder called “Bubble-Phobia”, which is an irrational fear that prices are disconnected from the “fundamental”.
As with the early psychological breakthroughs of Jung and Freud, for the S&P-500 there has been no shortage of theories, all the way from P/E ratios to Tobin’s “Q’s” and everything in-between.
Read full article... Read full article...
Monday, October 04, 2010
U.S. Stocks Not Cheap, S&P Earning Estimates Still Overly Optimistic / Stock-Markets / Stock Market Valuations
By: Mike_Shedlock
Bloomberg reports S&P 500 Profits Cut for First Time in Year by Analysts.
Read full article... Read full article...For the first time in more than a year analysts are cutting their forecasts for Standard & Poor’s 500 Index earnings, jeopardizing gains from the biggest September rally since World War II.
Friday, September 03, 2010
US Global Consumer Franchise Stocks –Surely Value lies with these Stocks not Bonds! / Stock-Markets / Stock Market Valuations
By: Rory_Gillen
To say that the 2000s have been a difficult period for investors in risk assets is an understatement. Equities have suffered two significant bear markets and the bursting of the property bubble and resultant global banking crisis brought the global economy to its knees. And the ordinary saver, looking for a risk free return, is suffering too with generational low interest rates. And to cap it off, the Greek debacle has highlighted that even government bonds are not risk free. One might justifiably ask – is there any port in this seemingly endless financial storm?
Wednesday, August 18, 2010
The Overvalued Part of a Stock Market Cycle / Stock-Markets / Stock Market Valuations
By: Richard_Daughty
I had just gotten home from arguing with the in-laws about how they were idiots for not buying gold instead of those stupid stocks and mutual funds, and their laughter was still ringing distastefully in my ears when Eric Fry here at The Daily Reckoning put up a chart of the P/E ratio of the S&P500 over the last 30 years since 1981.
Sunday, July 18, 2010
Why Are Economic Debates in Academia So Bitter? Answer Because the Stakes Are So Low / Stock-Markets / Stock Market Valuations
By: Charles_Maley
John Hussman of the Hussman Funds has a Ph.D. in economics from Stanford. He used to be a professor of economics and international finance at the University of Michigan. Now, he’s a highly successful money manager. John tells a story about how Paul Krugman once gave a talk at Stanford about a model of economic development which caused him to leave academia and become a money manager.
Friday, July 16, 2010
Stocks Haven't Been This Cheap in Over 20 Years / Stock-Markets / Stock Market Valuations
By: DailyWealth
Chris Mayer writes: I have friends and family invested in the ideas I write about in my advisories.
So, when I see someone, the conversation usually turns to stocks. You know how most people comment on the weather in some way early in a conversation. With me, it's the market people want to talk about first.
Wednesday, July 14, 2010
Are Stocks Currently Cheap? / Stock-Markets / Stock Market Valuations
By: Michael_Pento
Perma-shills have been claiming of late that the stock market is now trading at an enticing valuation. Their main evidence for this, as they are fond to claim, is that the forward Price to earnings multiple is 12 times next year’s earnings for the S&P 500. And, of course, a 12 PE multiple makes stocks cheap and the overall market a buy.
Tuesday, July 13, 2010
Stock Market 40% Over Valued, Hussman on Valutions and Earnings Estimates / Stock-Markets / Stock Market Valuations
By: Mike_Shedlock
Once again John Hussman has written an excellent weekly column. This week, in Misallocating Resources, Hussman talks about stock market valuations, PE ratios, bailouts, and other things.
Let's start with a look at stock market valuations.
Friday, June 18, 2010
Stock Market 60's Unwinding...1105 Holds Again.... / Stock-Markets / Stock Market Valuations
By: Jack_Steiman
We were overbought starting things out yesterday. The market was close to the top of the range or close to getting through the 50-day exponential moving average at 1119 S&P 500. Overbought at resistance means you're not getting through short-term. The market needed to pull back or at the very least, move laterally so as to work off those overbought 60-minute charts.
Read full article... Read full article...
Friday, April 09, 2010
Did Tiger Woods Trash $12 Billion of Brand-Value; or Hand Over a $17 Billion Gift? / Companies / Stock Market Valuations
By: Andrew_Butter
So far Nike has spent $60 million on Tiger Woods.
If you invest in companies that spend that sort of money on hype, the skill of management in distilling out bang for buck is an important consideration. That of course is the problem with advertising, only half of it works (if you’re lucky) and you never know which half, and more to the point, working out the value of the brand is just as hard.
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Tuesday, March 30, 2010
How the Dow Has Really Performed When Measured in Real Money (Gold) / Stock-Markets / Stock Market Valuations
By: EWI
"Your cheating chart will tell on you."
Hank Williams may not have known about Elliott waves, but he did know when a story doesn't add up. Such is the case with the nominal rise of the Dow Jones Industrials from 2000 to 2007. In the language of country music, this stock index has a "Cheatin' Chart" -- it doesn't tell the real story.
Read full article... Read full article...
Sunday, January 17, 2010
This Could Crush Stock Market Valuations / Stock-Markets / Stock Market Valuations
By: DailyWealth
Porter Stansberry writes: By now, most every DailyWealth reader knows the argument for higher interest rates.
Simply put, the U.S. government is facing a staggering amount of unfunded liabilities in 2010... around $3.5 trillion to be exact. As I described in my commentary on the Greenspan/Guidotti rule, the only way the government can make the interest payments on this debt (a good deal of which has been acquired in the past 12 months) is by printing money.
Wednesday, January 13, 2010
NASDAQ-100 Bubble Bust Compared To S&P 500 Stocks Index / Stock-Markets / Stock Market Valuations
By: Andrew_Butter
Interesting remark in a recent article by Karl Denninger:
But in 2003 credit was rapidly expanding, as it was in 2004. This is why the S&P expanded back to (and slightly beyond) its previous high - that was all financial leverage. The Nasdaq, made up of companies that made "things" (and services) for the most part, did not recover because it was not able to play financial engineering.
Read full article... Read full article...
Wednesday, January 13, 2010
Would You Buy This Business? / Stock-Markets / Stock Market Valuations
By: Graham_Summers
Hi there,
I would like to sell you my business. Of course, you’re going to want to know a little bit about it before buying, so let’s look at the numbers.
Read full article... Read full article...
Friday, November 13, 2009
Financial Asset Bubble Spotting Isn’t Hard: But Whose Job Is It? / Stock-Markets / Stock Market Valuations
By: Andrew_Butter
There is no dispute about what happened in USA over the past few years:
1: There was a Tech Bubble – It popped (that caused economic damage).
2: There was a Housing Bubble – It popped (that caused economic damage)
Monday, November 02, 2009
Long Term Equity Valuation, Replacing the P/E Ratio for DR3 / Stock-Markets / Stock Market Valuations
By: Francois_Soto
Is the S&P 500 undervalued from the current level? To answer this question, one might be tempted to look at the actual P/E (Price / Earnings) and establish a comparison with its historical data. You most likely have seen this chart before:
Monday, October 26, 2009
Valuation 101: How Warren Buffet Does It; And Brooksley Born Wanted It Done / Stock-Markets / Stock Market Valuations
By: Andrew_Butter
A while back I caught a clip of Warren Buffet being interviewed by a rather tiresome over-bubbly television star; who brightly asked him a really-really profound question that the scriptwriter had obviously spent all night dreaming up:
“So Mr. Buffet, how do you know if something’s a good investment or not?”
Read full article... Read full article...
Friday, October 16, 2009
Does the Stock Market S&P Remain Good Value? / Stock-Markets / Stock Market Valuations
By: Seven_Days_Ahead
The Technical Trader’s view:
Friday, October 16, 2009
Stock Market Rally, Doing the Maths / Stock-Markets / Stock Market Valuations
By: StocksBuddy
The early part of the rally in the US began with a "Hope" that things will get better as days progress. In the subsequent days/months, almost all of the media, news channels and websites were inundated with news such as "Better than expected" which drove and is still driving the market higher. What is this "better than expected" and the math beyond this is what we intend to analyze here. You will be really surprised to see "The Math".
Wednesday, September 30, 2009
This Stock Market Correction Is Dead / Stock-Markets / Stock Market Valuations
By: Steve_Selengut
Actually, hindsight and the Investment Grade Value Stock Index (IGVSI) Bargain Level Monitor tell us that it died early in March 2009. More realistically, however, corrections don't die quite so abruptly. They are supplanted by rallies--- and vice versa.
Read full article... Read full article...
Friday, September 04, 2009
How Overpriced Is The Stock Market S&P 500 Index? / Stock-Markets / Stock Market Valuations
By: Mike_Shedlock
Inquiring minds are wondering How Overpriced Is The S&P?
It's an excellent question given bulls feel the market is headed much higher while the bears feel the opposite after a remarkable 50% rally.
Thursday, August 27, 2009
Stock Market Rally, Is There A Cloud In The Silver Lining? / Stock-Markets / Stock Market Valuations
By: Charles_Maley
My brother Jim has been trading the markets for over thirty years. Yesterday, we got involved in a conversation about the markets and the stock market in particular. He always does a good amount of research to support his own trading decisions and since sharing observations is one of the reasons I started this blog, I thought we should at least be aware of these points.
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Friday, August 21, 2009
Bob Farrell, 10 Rules to Follow for this Stock Market / Stock-Markets / Stock Market Valuations
By: Q1_Publishing
There aren’t too many hard and fast rules to be a successful investor.
After all, investing successfully at times requires you to flexible or rigid, take action in a plodding or swift manner, patient or impatient, and it all depends on ever-changing circumstances.
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Thursday, July 16, 2009
What You Should Do If the Stock Market Falls Farther from Here / Stock-Markets / Stock Market Valuations
By: DailyWealth
Dan Ferris writes: Though the big stock market indexes are well below their late 2007 highs, I don't expect investors will make much money in stocks on the long side from current price levels. Record dividend cuts, weak earnings, and unattractive valuations are telling you to be careful buying stocks these days.
Thursday, July 02, 2009
Million Dollar Question, What's Next for S&P 500 Stock Market Index / Stock-Markets / Stock Market Valuations
By: Prasoon_Gopal
S&P 500 has rallied over 40% in the last 3 months. It takes over 5 years under "normal" circumstances for such a rally to occur. But again, folks will say, it takes as many years for 50% downside as well. So, i will rest this discussion at peace.
Tuesday, June 30, 2009
Consider the Components of Long-term Stock Market Returns / Stock-Markets / Stock Market Valuations
By: Prieur_du_Plessis
The raison d’être of investment or wealth management is to maintain, or hopefully improve, one’s standard of living, i.e. to earn a real return on the investment amount. This sounds easy enough if one considers that the S&P 500 Index (and its predecessors prior to 1957) delivered a nominal return of 8.7% per annum from January 1871 to June 2008. With an average inflation rate of 2.2% per annum over the period, this meant a real return of 6.5% per annum.
Monday, June 15, 2009
Stock Market S&P 500 Valuation With Normalized Earnings / Stock-Markets / Stock Market Valuations
By: Richard_Shaw
There are many institutional S&P 500 forecasts in the media for 2009, generally ranging from 850 to 1100 with some outliers on each side, but seldom is the underlying detail provided. One of the more common methods of estimation involves normalization of earnings times a reasonable multiple based on history.
Friday, May 22, 2009
How the Yield Curve Impacts on Stock Market Trends / Stock-Markets / Stock Market Valuations
By: Hans_Wagner
Will the steeper yield curve and higher interest rates have a negative affect on stock prices? During the week of May 4, 2009, the U.S. Treasury conducted a record $71 billion May refunding that required higher rates than expected to complete. In fact, the 10-year yield completed its seventh straight weekly rise, a move that has not happened in five years. A steeper yield curve means companies selling longer-term corporate bonds must pay more for the privilege. It shows that interest rates affect investors in the stock market.
Wednesday, May 20, 2009
Will the Stock Market S&P Index Fall to 450, P/E 7 or Not? / Stock-Markets / Stock Market Valuations
By: Andrew_Butter
Professor Shiller's numbers are persuasive; since anyone can remember, whenever the stock markets and/or the economy got into a train wreak, the bottom in the stock market that followed coincided when P/E ratios went down to about 7.
By that logic, plus the awful economic news (a little bit better is still awful), the S&P 500 is going down to 450, and the issue is not IF it's WHEN?
Read full article... Read full article...
Monday, May 18, 2009
Stock Market is 50% Over Valued, Bear Market is Not Over! / Stock-Markets / Stock Market Valuations
By: Money_and_Markets
Sharon A. Daniels writes: The stock market has managed to claw its way higher since early March, despite some of the worst headlines since this financial crisis began.
Suddenly, “green shoots” are springing up everywhere, but they can just as easily turn into wilting weeds again this summer, as I’ll show you in just a moment.
Read full article... Read full article...
Monday, May 18, 2009
Stock Markets Expensive on Falling Corporate Earnings Basis / Stock-Markets / Stock Market Valuations
By: Paul_J_Nolte
Nothing to see here…just move along was the phrase du jour, as investors seem to look past still higher unemployment claims (due to Chrysler plant/dealer closings) and lower retail sales. While the markets declined, it seemed to be due to a lack of interest as volume declined than “hard-core” selling. This week will bring more data on the housing sector, which should set the tone for the remainder of the month, as little in the way of earnings or significant economic data will be released on the holiday shortened following week.
Read full article... Read full article...
Monday, May 11, 2009
Stock Market S&P 500 Index Rolling Price Returns from 1926 / Stock-Markets / Stock Market Valuations
By: Richard_Shaw
This chart presents the 12-month rolling price return of the S&P 500 from January 1926 through April 2009. It also shows the 3-year, 10-year and 83-year averages of the 12-month rolling price return.
Read full article... Read full article...
Saturday, April 11, 2009
Stock Market, Where Do We Go From Here? / Stock-Markets / Stock Market Valuations
By: Mike_Stathis
A couple of days ago I made a couple of posts elsewhere about the market direction. Basically, what I said (from memory) was that the rally has topped out. At best, this rally could see 8200, but that's it. From here, the market is likely to sell off hard once the horrendous earnings come in. Read full article... Read full article...
Wednesday, March 25, 2009
Stock and Housing Market Long Waves / Stock-Markets / Stock Market Valuations
By: Andrew_Butter
I got it - that's why Bernake (and Geithner) are flying the plane into the ground. The most common cause of air crashes is when pilots fly planes into the ground. The reason they do that is that they get confused about where they are. 23rd March 2009 Chairman Bernanke said that if a couple of trillion hadn't been thrown into the fire, then Plumber Joe (and sweet Mary Lou) would have lost 70% of their 401K by now not 40%; (and presumably their house too). Pity he didn't get around to that conclusion in early 2007 and cut rates to zero then, rather than hanging on for ages telling everyone that everything was under control "so as to instill "confidence"", I quote from his presentation to Congress in May 2007: " At this juncture, however, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained”. Read full article... Read full article...
Friday, March 13, 2009
Stock Market– Record Increase in Supply Meets Extreme Risk Aversion / Stock-Markets / Stock Market Valuations
By: Paul_L_Kasriel
Equity prices, like the prices of everything, are determined by the interaction of supply and demand factors. The latest flow-of -funds data from the Federal Reserve have an interesting factoid on the supply-side of the equities-price equation. In the fourth quarter of last year, net issuance of domestic corporate equities totaled $986 billion at a seasonally-adjusted annual rate - a record dollar amount of issuance (see Chart 1). This also was a record issuance relative to nominal GDP - 6.9% (see Chart 2). Read full article... Read full article...
Friday, March 13, 2009
Pet Rocks Stock Valuation and Mark-to-Market Accounting / Stock-Markets / Stock Market Valuations
By: Chris_Ciovacco
Below are excerpts from a Marketwatch article dated March 11, 2008. WASHINGTON (MarketWatch) -- The Republican Study Committee, a group of conservative GOP lawmakers, believe that instead of pumping billions to bail out banks, lawmakers could save the economy by simply eliminating controversial mark-to-market accounting rules, which require daily revaluing of assets [based on market prices]. The first step is a hearing Thursday, hosted by House Securities Subcommittee Chairman Paul Kanjorski, D-Penn. Kanjorski argues that the standards have proven "problematic" for banks' illiquid assets...Read full article... Read full article...
Friday, March 13, 2009
Stock Market S&P 500 Trends: 1980 - 2009 / Stock-Markets / Stock Market Valuations
By: Richard_Shaw
Since we are in an historic set of economic conditions, and we have experienced an historic recent decline in equity prices, it is appropriate to examine historical market trends to put this year in perspective. Read full article... Read full article...
Friday, March 06, 2009
Stock Market is Now Fairly Valued But Watch Out Below / Stock-Markets / Stock Market Valuations
By: Mike_Stathis
The stock market (the DJIA) is now very close to fair value based on my forecasts made in 2006. But fair value doesn't mean the market won't go any lower. It's likely to fall considerably lower. I'll explain below. I decided to do a Q&A format so I can cover more material in less time.Read full article... Read full article...
Saturday, February 28, 2009
Stock Market Valuations, Siegel vs Standard & Poor's / Stock-Markets / Stock Market Valuations
By: Richard_Shaw
(WSJ Feb 25, 2009) “The S&P Gets Its Earnings Wrong, Stocks are cheaper than they look”, by Jeremy J. Siegel
Economist Jeremy Siegel (associated with WisdomTree funds, and professor at Wharton) is an important figure. When the Wall Street Journal published his editorial ( read full article ) claiming that Standard & Poor's had a flawed method that massively overstates the S&P 500 P/E, that became something that can't be ignored. In fact, Siegel said if S&P had calculated index earnings correctly, investors would see that stocks are historically undervalued.
Read full article... Read full article...
Saturday, February 28, 2009
Stock Market Long-term Value Investing Fundamentals / Stock-Markets / Stock Market Valuations
By: John_Mauldin
- More About the Long Run
- Stocks for the REALLY Long Run
- If You Don't Like the Numbers, Then Change Them
- Buy and Hope
- A Few Thoughts on Taxes and Budgets
- Nouriel Roubini, Yahoo Tech Ticker, and Me
This week Professor Jeremy Siegel (author of Stocks for the Long Run) had an op-ed in the Wall Street Journal showing that stocks are now cheap. I was on Tech Ticker, and Henry Blodgett challenged me about my e-letter last week, where I talked about how expensive stocks are. So which is it? We look at Professor Siegel's work -- and I let you decide.
Read full article... Read full article...
Friday, February 27, 2009
Collapsing Earnings, Soaring PE Ratio Mean Much Lower Stock Prices / Stock-Markets / Stock Market Valuations
By: Hans_Wagner
Quick question. Is the current S&P 500 PE ratio trending down or up? If you are like most investors, you believe the S&P 500 PE ratio is trending down as the stock market plunges. After all, the P part of the ratio is dropping. Read full article... Read full article...
Sunday, February 22, 2009
Crashing Corporate Earnings Resulting in Soaring S&P PE Ratio / Stock-Markets / Stock Market Valuations
By: Prieur_du_Plessis
Bespoke: Up days - the scarcest commodity of all “While the world suddenly finds itself with a glut of oil and other related commodites, one thing that is certainly in short supply so far this year is an up day in the market. So far this year, the Dow has finished the day higher on 36.7% of the 32 trading days (through Wednesday). We all know that it has been a bad year, but this is down right depressing!
Read full article... Read full article...
Saturday, January 03, 2009
Bad Corporate Earnings Points to Retest of Stock Market Lows / Stock-Markets / Stock Market Valuations
By: John_Mauldin
- 2008: Annus Horribilis, RIP
- The Aftermath of Financial Crises
- ISM: Anywhere You Look It Is Bad
- Another Round of Earnings Disappointments
- A Bear Closes His Short Fund
- La Jolla, Bermuda, Florida, and Writing
I meant to take yet another Friday away from my writing, but as I am researching for next week's annual prediction issue, there is so much material that begs to be covered that I thought I would put out a short letter with 3 or 4 points as a preface to my prognostications of next week.
Read full article... Read full article...
Friday, December 19, 2008
Despite the Crash, Stock Markets are Not Too Cheap to Buy / Stock-Markets / Stock Market Valuations
By: Money_Morning
Keith Fitz-Gerald writes: For many investors, a low Price/Earnings (P/E) ratio is a sign of value. But don't you bet on it – at least, not yet.
According to Michael T. Darda , chief economist for MKM Partners LLC , analysts have overestimated earnings by an average of 30% to 35% in the last three recessions. For millions of investors who use low P/E ratios as a litmus test for selecting their investments, that's going to be a rather unpleasant shock.
Read full article... Read full article...
Thursday, December 11, 2008
Companies Trading at Bargain Basement Values / Companies / Stock Market Valuations
By: Money_and_Markets
Larry Edelson writes: I'm going to cut to the chase. No complex economic theories … no philosophy … no complicated analysis.
Just the facts and practical insight on how to grow your wealth.
Read full article... Read full article...
Wednesday, December 10, 2008
Watching for Good U.S. Stock Market Entry Points / Stock-Markets / Stock Market Valuations
By: Richard_Shaw
We are waiting watchfully for a good re-entry point for US equities using the substantial cash position we raised last summer.
The critical factors we are watching to identify a prudent re-entry point — information we will use to become comfortable that the storm we avoided has passed by — are:
Read full article... Read full article...
Wednesday, December 10, 2008
Beware of the Stock Market Valuations Trap / Stock-Markets / Stock Market Valuations
By: Money_Morning
Louis Basenese writes: this your warning…
With thousands of stocks down 50% (or more), investors are salivating over the bargains. But for every true deal, there are at least three “value traps” - stocks destined to languish at depressed levels indefinitely. Or worse, get cheaper still.
Read full article... Read full article...
Tuesday, December 09, 2008
Stock Market Valuations and Dow 5,000 Redux / Stock-Markets / Stock Market Valuations
By: John_Mauldin
What is fair value for stocks? Are they now cheap? You can certainly make that argument by comparing valuations based on past performance. But repeat after me, "Past performance is not indicative of future returns." The investment climate of today is almost certainly going to be quite different than that of the 80's and 90's. Thus, to expect stocks to repeat the performance of the last bull market in a climate of government intervention, deleveraging and increased regulations may not be realistic?Read full article... Read full article...
Wednesday, December 03, 2008
U.S. Stock Market Valuations and Returns, What's Next? / Stock-Markets / Stock Market Valuations
By: Prieur_du_Plessis
Stock market movements over the past few months have been characterized by increased volatility as uncertainty became paramount. And as new pieces of the economics puzzle are added every day, investors are increasingly grappling to make sense of the most likely direction of stock prices.
It seems to be a case of so many pundits, so many views. Has the market started bottoming out, or are bourses still in the grip of the bear? Or is a “muddle-through” trading range in store?
Read full article... Read full article...
Monday, November 24, 2008
A Stocks Bull and Bear Market / Stock-Markets / Stock Market Valuations
By: Paul_J_Nolte
Looks like I picked the wrong week to quit sniffing glue! Up until Friday, last week was a pretty bad year, down over 13% and the specter of another US bank hitting the ropes along with most, if not all the auto companies sent investors running for the safety of government bonds. The yields are now below 0.05% on 3-6 month bills (that is NOT a misprint!). By Thursday's close, the markets had erased all of the gains from the bull market of '03-'07 and pushed the SP500 down to levels that were first breached during April of '07. Read full article... Read full article...
Thursday, November 20, 2008
Secrets to Stock Market Value Investing Profits / Stock-Markets / Stock Market Valuations
By: Money_Morning
Keith Fitz-Gerald writes:
Value funds have long been viewed as conservative investments. So why are they down an average of 42% during the past 12 months, and what's wrong with them?
No question, such numbers are scary, especially for large-cap value fund investors who have experienced that 42% drop. And the fact that some of the biggest names in value investing have taken such big beatings has to be especially disconcerting for investors who already have had their confidence badly shaken and their portfolios eviscerated.
Read full article... Read full article...
Monday, November 17, 2008
Value Stock Market Investing- The November Syndrome / Stock-Markets / Stock Market Valuations
By: Steve_Selengut
Every fall, especially in opportunity rich markets like this, I encourage investors to think about some year-end strategies that make the final calendar quarter a special time in all markets. Several forces are at work, all of which have links to conventional Wall Street wisdom; none of which promote good long-term investment decision-making. Read full article... Read full article...
Sunday, November 16, 2008
Peak Earnings and the Secular Stocks Bear Market / Stock-Markets / Stock Market Valuations
By: Mike_Shedlock
Before we explore the concept of Peak Earnings let's take a look at the mad rush by financial institutions to become banks or bank holding companies. I will tie the ideas together in just a bit. The mad rush to become a bank continues. Reuters is reporting Genworth in deal to buy bank, seeks TARP money .
Read full article... Read full article...
Thursday, November 13, 2008
Where Stock Market Valuations and Technical Support Intersect / Stock-Markets / Stock Market Valuations
By: Chris_Ciovacco
Where observation is concerned, chance favors only the prepared mind.” Louis Pasteur (1822-1895)
The basic fundamental value in buying a stock or a business is the cash flow it can produce over time. Investors discount expected cash flows to a single present value to come up with a valuation for a stock or business. You value a stock the same way you would value a dry cleaning business. A prospective buyer of a dry cleaning establishment wants to know how much cash it can produce over time after all the bills are paid.
Wednesday, November 05, 2008
Current Stock Market S&P Index P/E Ratio in Historical Perspective / Stock-Markets / Stock Market Valuations
By: Richard_Shaw
As we look for a bottom and read articles about P/E ratios as they relate to historical norms, it can be quite confusing.
The numbers seem all over the lot. The principle reason is that there are many different methods of calculating P/E, and the norms against which they are compared are not always calculated on the same basis (particularly if comparing operating earnings P/E versus “as reported” historical figures).
Read full article... Read full article...
Friday, October 31, 2008
Stock Market Price Earnings Reversion Towards the Mean / Stock-Markets / Stock Market Valuations
By: Hans_Wagner
If you want to beat the market, it is a good idea to learn how the Price Earnings ratio (PE ratio) is used. To investors the PE ratio is the most widely used indicator of the value of a stock and of the market. When the PE ratio of the market index such as the S&P 500 is high, it is considered a sign that the market may be over valued. On the other hand when the PE Ratio of the S&P 500 is low, it is normally a sign that the market is under valued. What is the PE Ratio telling us now? Read full article... Read full article...
Wednesday, October 29, 2008
Seasoned Investors Search for Stock Market Values / Stock-Markets / Stock Market Valuations
By: David_Shvartsman
As we mentioned yesterday in, "Are we too bearish?" , today's post focuses on areas of investment that are starting to look attractive to seasoned investors. Read full article... Read full article...
Tuesday, October 28, 2008
Wall Street Fire Sale Produces Closed End Fund Bargains / Stock-Markets / Stock Market Valuations
By: Steve_Selengut
There's a bright light at the end of the tunnel--- finally. Most of the really well respected, long term investors are advising their audiences to hang in there, to stop the panic selling, and to look for the great companies that have withstood the economic downturns of the past. Buffet, Bogle, Gross, Schwab, and company offer sound advice--- don't run and hide, it's time to hit the Wall Street Mall and go shopping! They've seen the indicators; they've been there before. So have many of you. Clearly, it's time for action.
Read full article... Read full article...
Tuesday, October 28, 2008
Stock Market Crash Investor Overreaction Value Investing / Stock-Markets / Stock Market Valuations
By: John_Mauldin
- How Should We Then Invest?
- Those Wild And Crazy Analysts
- The Evidence for Investor Overreaction
- Stock Prices Are In Our Heads
- Or, Maybe Investors Are Just Head Cases
- Can We Actually Predict Earnings?
- Buffett versus Grantham
- Back to 1974?
Friday, October 10, 2008
Investment Grade Value Stocks Hit Ten Year Lows / Stock-Markets / Stock Market Valuations
By: Steve_Selengut
There has never been a correction that has not proven to be an investment opportunity. While everything is down in price, there is actually less to worry about than when prices are historically high. More money has been lost by people who bought into last year's markets than by those who will buy into this one, at this stage of the correction. When the going gets tough, the tough go shopping. Read full article... Read full article...
Wednesday, September 24, 2008
Which S&P P/E Ratio Are We Talking About? / Stock-Markets / Stock Market Valuations
By: Richard_Shaw
Business news about earnings and P/E ratios is frustrating and flawed. If you listen to and read enough reports, you find wide variances in the numbers. Why?
It's all about the “E”. Nobody has trouble figuring out the “P”, but the “E” has many possible meanings:
Read full article... Read full article...
Sunday, August 17, 2008
Recessionary Contracting Earnings Lift Stock Market P/E Ratios / Stock-Markets / Stock Market Valuations
By: Prieur_du_Plessis
Richard Russell (Dow Theory Letters): Danger of deflation “We've recently seen the greatest expansion of credit in history. It was a product of Asian and Mid-Eastern countries holding down the value of their currency by creating more of their own money and buying dollars. The Fed got into the act in 2003 when it held down Fed Funds to 1% for month after month. It was a wild expansion of money and credit. Now the party is over.
Read full article... Read full article...
Saturday, August 09, 2008
Stock Markets Heading for Price Earnings Reversion Below the Mean / Stock-Markets / Stock Market Valuations
By: John_Mauldin
- The Rise of A New Asset Class, Part 2
- Unrealistic Expectations
- The Boomers Break the Deal
- A Nation of Wal-Mart Greeters
Last week's letter was the first part of a speech I have been giving on what I think will be the rise of a new asset class. This week will be the second and final part. Let me set up this section with a few paragraphs from last week's letter and then a quick summary. If you want to read the entire letter from last week, you can go to the website archives .
Read full article... Read full article...
Saturday, August 02, 2008
New Investment Era, Contracting Earnings and PE Reversion Below the Mean / Stock-Markets / Stock Market Valuations
By: John_Mauldin
This week I am in Maine on vacation with my son, and next week is my daughter Tiffani's wedding, so for the next two weeks I am going to send an updated version of a speech I have been giving the past few months on what I think is the likely potential for the rise of a brand new asset class. It is too long to be sent as one letter, so we will start with the first part today and finish with the second part next week. This first part can be read as a standalone letter.
I think we're at a watershed moment, what Peter Bernstein defines as an "epochal event," with the very order of the investment world changing as it did in 1929, in '50, in 1981, where a number of things came together - it wasn't just one thing but a number of events happening that conspired to change the nature of what worked in the investment world for the next period of time.
Read full article... Read full article...
Friday, July 18, 2008
Dow Jones Stocks Index Hits Price to Earnings Fair Value / Stock-Markets / Stock Market Valuations
By: Zeal_LLC
In recent weeks a major secular milestone was achieved in the US stock markets. But because of all the distracting market turbulence, very few investors are even aware it happened. And truth be told, even if the markets weren't plunging I still suspect only the most diligent students of the markets would have any inkling.
The venerable Dow Jones Industrial Average, or Dow 30, finally returned to fair value as measured by its price-to-earnings ratio. This is major secular milestone because it marks the halfway point in the 17-year secular bear in which the Dow 30, and the broader US stock markets, have been mired since early 2000. Understanding the implications of this milestone is exceedingly important for all stock investors.
Read full article... Read full article...
Friday, July 11, 2008
Decade of No Investment Returns, Part II / Stock-Markets / Stock Market Valuations
By: Adrian_Ash
"... Giving money to stockholders now looks like so 20th century, it's downright Victorian...!"
EVEN AFTER their dividend checks, US stock investors earned less than zero thanks to inflation in the 10 years to July 2008.
That marked the first Decade of No Returns in a quarter-century according to Richard Bernstein at Merrill Lynch. And seeing what's happened to US stocks so far in the second-half of 2008 – and given the US authorities' likely response – it won't be the last.
Read full article... Read full article...
Wednesday, July 09, 2008
The Decade of Zero Investment Returns, Part I / Stock-Markets / Stock Market Valuations
By: Adrian_Ash
"...Ten years here, a decade there, and pretty soon you're losing real wealth hand over fist..."
WHAT A DIFFERENCE a decade can make! Over the last 10 years of the 20th century, anyone buying and holding US stocks made a total return approaching 18% per year.
Read full article... Read full article...
Tuesday, July 01, 2008
When All Stocks Are Value Stocks / Stock-Markets / Stock Market Valuations
By: Steve_Selengut
Think QDI - Value stocks are those that tend to trade at lower prices relative to their fundamental characteristics than their more speculative cousins, the growth stocks; they have higher than usual dividend yields and lower P/E and P/B ratios. So when all stock prices are down significantly, have they all become value stocks? Or, based on the panicky fear that tends to overwhelm media and financial experts alike, haven't they all taken on the speculative characteristics of growth stocks? Read full article... Read full article...
Friday, June 27, 2008
Corporate Earnings Expectations Are Too High- Prepare for More Downside / Stock-Markets / Stock Market Valuations
By: Hans_Wagner
We are about to enter the second quarter 2008 earnings season. If you want to beat the market, it important to have a well founded perspective on earnings expectations. Understanding the importance of earnings is critical if you wish to learn to invest.
Since the U.S. is in a recession, it is normal to expect the reported earnings to reflect the slowing economy. However, a number of analysts are still forecasting a higher PE ratio. Is this realistic and a good basis to make investing decisions?
Read full article... Read full article...
Saturday, June 21, 2008
Oracle of Omaha Bets S&P 500 Stock Market Index Will Outperform Hedge Funds / Stock-Markets / Stock Market Valuations
By: John_Mauldin
- Warren Makes a Bet
- It's All About Values
- Hedging Your Bet
- Mean Reversion of National Wealth
The Sage of Omaha made a bet that was written up in a recent Fortune magazine article. Basically, Warren Buffett bet that the S&P 500 would outperform a group of funds of hedge funds over the next ten years. A million dollars to someone's favorite charity is on the line. This week we will analyze the bet, using it as a springboard to learn about valuation and value investing. As we will see, there are times that making a bet on the S&P 500 to outperform hedge funds (or bonds or real estate or whatever asset class) makes sense and times when it doesn't.
Read full article... Read full article...
Thursday, June 19, 2008
Global Stock Market PE Ratio's and Growth Potential- June 08 / Stock-Markets / Stock Market Valuations
By: Nadeem_Walayat
The last six months have been a turbulent time for most global stock markets. Gross overvaluation that saw the chinese stock market trading on a price earnings of more than 50 has been swiftly followed by a severe bear market that has wiped more than 50% of the stock market. At the time I warned that China is primed for a crash whilst many grasped at Nasdaq dot com bubble straws suggesting that China could run to a PE of 100 as Nasdaq had once done, it never happened. Read full article... Read full article...
Wednesday, June 18, 2008
US Stock Markets Weakening Earnings Growth Fundamentals / Stock-Markets / Stock Market Valuations
By: Prieur_du_Plessis
“Most of the time common stocks are subject to irrational and excessive price fluctuations in both directions as the consequence of the ingrained tendency of most people to speculate or gamble … to give way to hope, fear and greed,” said Benjamin Graham (co-author with David Dodd of Security Analysis, 1934 – considered by many to be the bible of value investing). Read full article... Read full article...
Sunday, May 04, 2008
Equities Over Optimistic Earnings Estimates as US Heads for Recession / Stock-Markets / Stock Market Valuations
By: Prieur_du_Plessis
Words from the (investment) wise - Part 1
USA Today: Warren Buffett – Economy in a recession, will be worse than feared
“Warren Buffett, the world's richest person, said Monday that the US economy is in a recession that will be more severe than most people expect.
Thursday, April 17, 2008
Are Corporate Earnings Expectations Too High? / Stock-Markets / Stock Market Valuations
By: Hans_Wagner
We are in the middle of the first quarter 2008 earnings season. Since the U.S. is in a recession, it is normal to expect the reported earnings to reflect the slowing economy. However, a number of analysts are forecasting a brief slowdown followed by a robust rebound. Is this realistic and a good basis to make investing decisions?
What History Tells Us
Read full article... Read full article...
Tuesday, April 15, 2008
The S&P 500: Offering Investors Attractive Valuations Or a Bull Trap? / Stock-Markets / Stock Market Valuations
By: Donald_W_Dony
As the S&P 500 gradually drifts lower in 2008, many analysts and portfolio managers are now saying the index has attractive valuations and are offering investors excellent profit opportunities. But is the S&P 500 really cheap at present levels? And are these recent short-term rallies just a bull trap? Read full article... Read full article...
Saturday, April 12, 2008
The Importance of Stock Market Valuation and Earnings / News_Letter / Stock Market Valuations
By: Nadeem_Walayat
The stock markets have managed to survive further turmoil in the credit markets by managing to rally from the March lows on the back of further central bank lending and interest rate cuts. However, looking forward to corporate earnings during the rest of 2008 in the face of a US recession and slowing economies across the western world. It is very difficult to support the over optimistic earnings growth forecasts that range for many markets of 10% for 2008 and 15% for 2009.Read full article... Read full article...
Saturday, April 12, 2008
Stock Market Valuation and Reversion to the Mean / Stock-Markets / Stock Market Valuations
By: John_Mauldin
- Market Cycle Math
- Where Are We Today?
- Analyze and Strategize
Are we in a bull, a bear, or a cowardly lion market? As we will see, the answer can make a huge difference in your investment portfolio. This week I am at my Strategic Investment conference in La Jolla. About four times a year I take a break from writing the letter and bring in a guest writer. This week Thoughts from the Frontline will have the very distinguished analyst and author Vitaliy Katsenelson.
Read full article... Read full article...
Tuesday, April 08, 2008
Watch the Stock/bond Ratio– Poll Results / Stock-Markets / Stock Market Valuations
By: Prieur_du_Plessis
I posted an article on the stock/bond ratio a few days ago, discussing the likelihood of the period of safe-haven buying of bonds coming to a close and the underperformance of stocks since the middle of last year being in the process of reversing. In essence, the post asked whether we were seeing a turning point of any importance in the stock/bond ratio.Read full article... Read full article...
Tuesday, April 08, 2008
Stock Markets to be Hit by Sharp Fall in Corporate Earnings / Stock-Markets / Stock Market Valuations
By: John_Mauldin
For the last few months in my regular letter I have been pounding the table that corporate earnings are going to decline this year, which is always a negative atmosphere for stocks. Since today is the beginning of the earnings season for the first quarter, I thought it would be helpful to look at this piece from our old friend James Montier, head of equity research at Societe Generale based in London. It seems that analysts are behind the curve when it comes to predicting future earnings. James shows us why and then goes on to demonstrate that even the meager earnings reductions that are projected are not priced into the market as many bullish commentators suggest. This should make for an interesting Outside the Box. Read full article... Read full article...
Sunday, April 06, 2008
Investment Perspective- What to do in a Tough Investment Climate? / Stock-Markets / Stock Market Valuations
By: Brian_Bloom
When the going gets tough, the tough get going. From an investment perspective, times are getting tougher; so what do we do?
Well, “step 1” is to straighten out our thinking so that we can face the future with clear heads. There are times when an investor's orientation should be to increase his/her wealth; and there are times when that orientation is more appropriately focussed on preserving what you have. In this analyst's view, we are now facing a time when stock market investor orientation should be defensive.
Read full article... Read full article...
Wednesday, March 26, 2008
Stock Market Technical's and Fundamentals Remain Weak / Stock-Markets / Stock Market Valuations
By: Chris_Ciovacco
While there is no question stocks are trying to form what market technicians call a double bottom, not much has really changed in recent weeks in terms of market leadership. It is helpful to take a step back and see what is actually happening from both a technical and fundamental perspective when times are uncertain and people are continually asking, "Has the market found a bottom?"Read full article... Read full article...
Saturday, March 15, 2008
Economy and PE Ratio Impact on Long-term Stock Market Investment Returns / InvestorEducation / Stock Market Valuations
By: John_Mauldin
- Muddle Through Gets A Boost
- Honey, I Vaporized My Customers
- Consumer Spending is Going, Going...South
- The Boomers Break the Deal
Today we drop back to take a look at the economy and its long term effect on our portfolio returns. I am in Orlando this week, speaking at the Newport Advisor Conference sponsored by the Newport Group. The attendees are primarily investment advisors focused on larger retirement accounts and pensions. This week's letter is the gist of my speech I gave yesterday, as the entire speech would be way too long for a weekly letter. I want to thank the Newport Group for letting me do this, and thanks for the very kind way they have hosted me. Note: this week's letter will print a little longer as there are a lot of graphs. And next week I will address the housing market, as was my intention this week.
Read full article... Read full article...
Monday, February 18, 2008
Key to Interpreting the Stock Market - Technical Or Fundamental Analysis? / Stock-Markets / Stock Market Valuations
By: Clif_Droke
One of the best practitioners of technical analysis of the last 30-40 years, and one of my personal favorites, was Ralph Bloch. Bloch was for many years the chief market technician with Raymond James and was renown for his down-to-earth manner and “say it like it is” approach to the stock market.
Bloch was known for using only the most basic of all analytical tools when it came to T.A. and he relied mainly on the charts and the tape for his trading decisions. When it came to his technical approach to the market, he once described himself as “a ham-and-egger…I'm a Technical Analysis 101 guy all the way.”
Read full article... Read full article...
Monday, January 28, 2008
US Stock Market Not Pricing in Recession! / Stock-Markets / Stock Market Valuations
By: John_Mauldin
What a difference a week makes! Recession talk is everywhere. This begs the question, are markets priced for such a possibility? We would suggest the answer is a resounding no. Valuation and cyclical risk are enormous. Yet, investors pile on the pressure by believing they can tell 'true' growth stocks from young pretenders. Simultaneously, investors seem to have transformed into speculators. This creates opportunities for those with the discipline to stick to their long-term process. Such investors are likely to find comfort in cash, if they are allowed. Failing that, large cap dividend paying stocks are probably the best place to hide. Read full article... Read full article...
Monday, January 21, 2008
Stocks Bull Market Ahead: Indicators Read Warp Speed Eight / Stock-Markets / Stock Market Valuations
By: Joseph_Dancy
With talk of a serious U.S. economic recession now being commonly heard on every corner, and with the massive write-offs now being taken in the financial sector soon to be followed by massive layoffs, it is a difficult time to be invested in the market. Volatility has been extreme, and we expect that will remain so for the first quarter of 2008. But our indicators point to the fact that later in the year we could see some very positive trends for investors.
Keep in mind that last year was a very poor year for small capitalization stocks. In fact, in general the smaller the company the worse the stock performed.
Thursday, January 17, 2008
Corporate Earnings Estimates for 2008 Defy Logic - Analysts Are Last to Embrace Reality / Stock-Markets / Stock Market Valuations
By: Michael_Pento
What a start for the year! The S&P 500 began with its worst initial 5 trading day performance ever, Goldman Sachs joined the chorus of those who are predicting a recession for 2008, consumer confidence sunk to a record low of 56.3 and the Markit CDX North American Investment Grade series 9 index (a measure of corporate bond default risk) climbed to 100 basis points—the widest since the index's inception four years ago.Read full article... Read full article...
Tuesday, January 08, 2008
Stock Market Valuations Misleading, Signal Substantial Weakness for 2008 / Stock-Markets / Stock Market Valuations
By: John_Mauldin
This week in Outside the Box John Hussman of The Hussman Funds strives to shed light upon the tumultuous and perplexing state that is the stock market. Having metaphorically, as in the Greek tale, driven by curiosity, opened Pandora's Jar (Box) of financial fantasy and unleashed the evil that has come to pass in the guise of subprime, all that remained was hope. Hussman intertwines hope with caution as we venture into the new year. Read full article... Read full article...
Saturday, December 22, 2007
Stock Markets Extremely Undervalued Under the IBES Valuation Model / Stock-Markets / Stock Market Valuations
By: Clif_Droke
Two tectonic plates and “The Big One” - We've all heard it before: The next major depression is expected to begin sometime around 2011-2012 and continue its ravaging impact until about 2014-2016. This belief has become so accepted among cycle theorists as to be almost a type of gospel.
And based on a purely deterministic interpretation of the K-wave and long-term Kress cycles, this outcome would make sense. Some persuasive arguments of this theory have even been advanced from a demographic perspective (see “The Next Great Bubble Boom” by Harry Dent and “Baby Boomers, Generation X and Social Cycles” by Edward Cheung, for example).
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Sunday, November 18, 2007
P/E Ratio Global Stock Markets Analysis and Technical Outlook - Nov 07 / Stock-Markets / Stock Market Valuations
By: Nadeem_Walayat
The Price / Earnings Ratio has long been recognized as one of the most useful financial indicators for valuing both individual stocks and stock markets. However as with individual stocks, it can be misleading if not also taking into account growth prospects for a particular economy. One of the primary indicators of growth is a countries real GDP, and as with an individual stock analysis, it is the consistency of trend that is important so as to avoid one year growth spurts.Read full article... Read full article...
Wednesday, November 07, 2007
Dow Jones Index Break of 13,000 Would Signal Bear Market and Recession / Stock-Markets / Stock Market Valuations
By: Brian_Bloom
Assuming reversion to the mean, and assuming historical earnings and dividends are maintained, the $SPX could pull back to 912 (40%) and the Dow Jones Industrials could pull back to 10018 (25%). Strictly speaking, this assumes three things:
- The mood on Wall Street turns Primarily Bearish – thereby pointing to a reassessment based on fundamentals
- Earnings remain constant
- There is a reversion to the historical mean
Wednesday, October 03, 2007
Lower Interest Rates = Lower Stock Market - The Double Failure of the So-Called Fed Model / Stock-Markets / Stock Market Valuations
By: Bob_Bronson
Lower interest rates will lower, not raise, the stock market's P/E the stock market decline will accelerate as the fed lowers interest rates : Despite the popularity of the so-called two-factor Fed Model among institutional investors, we've explained why and how it is a faulty way to value the stock market. For example, Treasury-based interest rates (“interest rates”) lower than the earnings yield (inverse of the stock market's P/E ratio, or E/P) does not mean the stock market is undervalued, as is hyped by TV talking heads and reported by most all of the financial media. A third factor, risk aversion (investor mood), must be considered. (Past article)
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Sunday, September 30, 2007
Quantifying and Forecasting an Equity Risk Factor: Fixing the Inaccurate So-Called Fed Model / InvestorEducation / Stock Market Valuations
By: Bob_Bronson
... and Why the Stock Market P/E is Declining to 10It is generally agreed that the most elegant equation in physics is E = mc 2 . In mathematics, it is e π i +1 = 0, which most simply connects the five most important numbers in mathematics. It is always and everywhere exact and even its most esoteric components -- the transcendental number, e, and its imaginary number, i -- are regularly used in physics and the other sciences, as well as many important fields today, including energy, computers and even valuing specialized securities. [i] Read full article... Read full article...
Friday, August 31, 2007
Stock Market Investing - The Case For Expanding PE Ratio / Stock-Markets / Stock Market Valuations
By: Hans_Wagner
Knowing whether the PE ratio is going to expand or contract is an important factor when trying to beat the market . This is the second of a four part series on which direction the PE ratio for the S&P 500 will go over the next couple of years. Last week we briefly went over how to use the PE ratio and then we will look at ways to get the underlying PE ratio for the S&P 500. It is not as easy as one might first think. In the later parts we will examine the potential for the S&P 500 PE ratio to expand, contract and then provide an opinion on what investors should do. You can read the first commentary at Will the PE Ratio Expand or Contract? Part 1 . For those readers interested in learning more on how to predict macro moves in the market check out Ahead of the Curve: A Commonsense Guide to Forecasting Business and Market Cycles 
by Joe Ellis.
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Friday, August 17, 2007
Importance of Long Stock Market Earnings Valuation Waves / Stock-Markets / Stock Market Valuations
By: Zeal_LLC
Just one month after the US stock markets achieved new all-time highs, today's fear-stricken equity landscape looks radically different. Investors and speculators alike are frantically dumping everything with reckless abandon, regardless of fundamental merit. The resulting carnage is impressive to behold.
Such episodes of wanton fear, though painful, are very healthy for the markets. They are necessary from time to time. In fundamentally-weak sectors, they force leveraged speculators to rein in their leverage and reduce their risk. In fundamentally-strong sectors, they shake out the weak hands who lack the courage to ignore their emotions and lack the faith to ride secular bulls through turbulent spells.
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Wednesday, July 25, 2007
If Leveraged Buybacks, Why Not Leveraged Dividends? / Stock-Markets / Stock Market Valuations
By: Paul_L_Kasriel
The equity investing community seems to get giddy when it hears the words “stock buyback.” And why not if the stock is being bought back out of current profits? But what if the corporation is increasing its debt to fund its stock buybacks? The chart below suggests that is what is occurring now and what occurred in the late 1980s and late 1990s. The red bars in the chart represent the dollar amount of the net issuance of equities of nonfinancial corporations. Readings below zero, which predominate, signify the net “retirement” of equities.Read full article... Read full article...
Thursday, May 17, 2007
Recipe for a Stock Market Crash / Stock-Markets / Stock Market Valuations
By: Clif_Droke
Over the past few days I've received quite a few nervous inquiries from investors who worry about the potential for the stock market to crash sometimes between now and year end. Part of this fear is founded on what is known as the Year Seven Phenomenon, which says that the seventh year of the decade usually sees a substantial stock market decline or even a crash, a ‘la 1987 and 1997.
The combined influence of the mythology surrounding the Year Seven Phenomenon is often used by perma-bear newsletter writers into scaring their readers away from the stock market during the seventh year of any given decade. A reflection of this latent fear, which all investors have had at one time or other, is found in the following e-mail I received recently: “I am still scared about that history of all years ending in 6 & 7 suffering one 20% correction since 1856.”
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Tuesday, May 15, 2007
An Optimistic Route to a Poor Stock Market Outlook / InvestorEducation / Stock Market Valuations
By: John_Mauldin
Value is a big and well-known strategy within the investment world. Many analysts and investors alike rely heavily on the P/E ratio as a metric to determine the value of a stock, indices or other form of security. But just as with any other investment metric, the data can be skewed if not viewed within the proper context.Read full article... Read full article...