Re: under or fairly valued stocks
so what is the average P/E and of S&P/Nasdaq/Dow these days? Any possible "corrections" on the radar?
Re: under or fairly valued stocks
Captain
Thank you for visiting us. Smt. Alamelu was down in the dumps after the cricket match today. The trooper that she is, she got her act together and has put together a response for your consumption - along with the garam chai you alwaays seem to be sipping.
Re: under or fairly valued stocks
Note that our office pays no attention to the DOW (not SOW, she is SMT now). We don't see the logic in following only 30 stocks. Especially when they are Price weighted. Which makes it overly dependent on stocks that don't split often. Imagine what a GOOG or AAPL can do to the DOW. Our office lost all respect for the DOWnanions when MSFT CISCO AND INTEL were added right before the bubble burst. While we no longer maintain DOW records, we vaguely recall Skank of America and Sh1tty Group were added right before Rome burned circa mid Oct 2007.
Re: under or fairly valued stocks
Ab rahi Nasdaq ki Baat. We don't know exactly what this beast is about. An unhealthy mix of Tech highfliers comprising household names such as GOOG AMZN AAPL FB coupled with some fancy sounding stocks ranging from what's up, zoomba and throw in a made up name. Enough to give one a splitting headache.
Add to that biotechnology highflies. And you have a hot potato in your hands.
Re: under or fairly valued stocks
So lets focus on s&p 500.
WSJ March 1.
P/E last 12 months. 17.87.
P/ E estimate next 12 mo. 15.85
This has never made sense to me. P is same. Ratio drops 12%. Are they saying earnings expected to increase 12%. Please. Even if you account for buybacks this is smoke of the Marijuana variety.
Re: under or fairly valued stocks
Average P to e based on last 12 months? I think is 15.
So 2.87/15*100 or 19% overvalued from this metric.
Let us not worry abt repeating calcs based on the Marijuana laced P/E based on estimate, shall we? Just say NO.
Re: under or fairly valued stocks
Did you know we have uograded our IT devices? As I type, I am looking at a website in another electronic device that provides similar data based on Schiller's p to e ratio based on average of last 10 yrs inflation adjusted earnings. I must say we have finally arrived. Into the 21st century.
Re: under or fairly valued stocks
Current Schiller P to E 25.72
Average 16.5
Median 15.9
Let us go with Median.
So 9.7/16*100 or 58% overvalued. Website multipl. Com
Re: under or fairly valued stocks
The same site lists p to e based on last 12 months to be 19.7
What is an investor to do, Captain sir WSJ gave this as 17.87.
Moving on.
The site gives Median as 14.53
So 5.2/14.5*100 = 36% overvalued.
Re: under or fairly valued stocks
So we have 3 numbers for markets overvaluation:
19% 58% 36%
I don't believe Schiller Median is as low as 16. Since Median p to e last 12 mo is 14.5 to 15.assuming schilker Median to be 18
25.7-18 is 7.7.
7.7/18*100 or abt 44%.
So range 20 to 44% overvalued. 20 36 44. Average 33% overvalued is best guess. Or 25% drop reasonable. Or 460 pts to 1400.
This is estimate. Note market in 2000 had p to e of 37. Which is abt double. That was bat sh1t crazy. With that ratio todays mkt would have been at 3720.
Re: under or fairly valued stocks
In 2007 mkt p to e I think was 28. - from memory guesstimate. Based on that mkt would have been 55% higher. Or around 2880.
I don't think it gets as high as 2007 p to e
Re: under or fairly valued stocks
But mkt p to e could go 20% higher. So 2230.
If mkt is 40% overvalued it could drop 30%. So 550 pts. To 1310.
So mkt range expected 1310 to 2230. 550 pts lower or 370 pts higher. Butcto go higher it still has to go bat sh1t crazy. If using same batsht metric on low side it can go to 1100.
So path of least resistance long term down from here. By circa 20%.
Re: under or fairly valued stocks
The monologue, for those who track it, is over. For now.
Re: under or fairly valued stocks
Re: under or fairly valued stocks
Off topic smilies are discouraged.
The market down 0.66%. We have encouraged our staff to remind our clients that Asset Allocation is the only free lunch.
Re: under or fairly valued stocks
The market made up yesterdays losses. And then some. Our office fielded several call thanking us for the the timely perspective, based on the chai sipping # 1 Captains recent query.
Let the credit go where its due. Smt. Alamelu, please step forward.
Re: under or fairly valued stocks
Our last update on performance wrt mkt was Feb 21. Readers have complained we are not updating due to Mkts strength. That would punify our portfolio.
Dear readers, that was hurtful and unnecessary.
Re: under or fairly valued stocks
In spite of the mkt reaching its 4th record high in six session Thursday our portfolio beat the mkt by 3% cap gains. Add 1.3% div diff and you get 4.3% outperformance over a rip roaring mkt in 18 months. We are not complainiing.
Re: under or fairly valued stocks
An accounting issue - we closed out our position ON AMAT at 19.44 Friday. Cap gains is 90%. Div in 18 mo abt 7. So 97% total return.
Gundappa Vishwanath was left stranded on 97 against Clive Lloyd's Windies 1975 at Chepauk. The one and only Bhagwat Chandrasekhar was out first ball. The Little. Master consoled him all the way to the pavilion.
Re: under or fairly valued stocks
The market has been on a tear. It is only fair we compare the returns of the stocks listed here vs the market since thread opened. I will do the comparison based on Nov 17 closing price. Due to time constraints, this exciting tidbit will be served to your e device of choice within the 48 hours.