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Thread: Market Valuation

  1. #141


    The march upwards of the S & P 500 was much influenced
    by the decline of the US $.

    So in 2017 S & P 500 went up 26 % in terms of US $
    but only 9 % in terms of Euros.

  2. #142


    Stock markets went higher, faster and more leveraged than ever.

    John Husman expects a 65 % correction to complete the speculative cycle.

  3. #143


    Six forces that might push stocks even lower:

    ---volatility ETF's volume
    ---RSI (Relative Strength Index) is in overbought territory
    ---high valuations, comparable with previous bubbles
    ---bond yields rising, leading to FED rising interest rates
    ---inflation rising
    ---tax cuts lowering profits and increasing inflation +interest rates

  4. #144


    Stock prices and interest rates

    Stock prices are quite sensitive to interest rates.
    The report below gives a simple explanation:

    P/D= 1/(r-g)

    P= price
    D= dividend
    r= return
    g= growth

    Presently approximative P/D=0.025 or 2.5 %

    Just a decrease of 0.5 % in (r-g)=0.02 or 2.0 % would
    imply a rise in P/D=50 or a rise of 25 % in stock price
    (assuming dividend D is constant).

    Conversely, an increase of 0.5 % in interest rate r
    would mean (r-g)=0.03 or 3.0 %, P/D=33 % or
    a 16.7 % fall in stock prices.

    No wonder stock prices are so volatile.

  5. #145


    Earnings and stock prices

    Although earnings and stock prices have both gone up,
    there is a disconnect between them.

    As S & P more than quadrupled from its post financial crisis
    nearly 9 years ago to its record high in January 2018, only
    40 % of these gains can be attributed to earnings.

    There is not always about fundamentals. There are technicals,
    valuations, sentiment, money flows etc

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