Money and Finance
- Hussman Weekly Market Comment: Pushing Luck
Link to: Pushing LuckThe latest data from the NYSE shows equity margin debt at a new all-time high. Relative to GDP, the current 2.6% level was eclipsed only once – at the March 2000 market peak. In the context of the most extreme bullish sentiment...
- Hussman Weekly Market Comment: The Truth Does Not Change According To Our Ability To Stomach It
Our estimate of prospective 10-year nominal S&P 500 total returns has eroded to just 2.3%, suggesting that equities are likely to underperform even the relatively low returns available on 10-year Treasury bonds in the coming decade. Those estimates...
- The Flaws In The Fed Model
Found via The Big Picture. There are perfectly reasonable arguments that can support an upbeat outlook on the stock market. Unfortunately for crafters and consumers of sound bites, one of the simplest and most popular bullish assertions is irrelevant....
- Nucor Stock Analysis
Nucor (NUE) operates mini-mills in the steel process. I recently ran their numbers through my spreadsheet and I'm fairly intrigued by the possibilities. Especially since I think the global economy is improving and the demand for steel should increase...
- Jnj Stock Analysis
I've started to try and consolidate my stock analysis spreadsheets to make it easier for myself to cruch numbers. I like JNJ and would love to get in but right now it seems that it's a little overvalued and there's just too many question marks...
Money and Finance
Stocks as overvalued now as at 2007 high - By Mark Hulbert
Here’s yet another reason to be worried about the stock market: A valuation model with an impressive record says that stocks are as overvalued today as they were at the 2007 stock market peak.
The model comes from Dan Seiver, a member of the economics faculty at Cal Poly State University. Seiver also is editor of an investment advisory service named The PAD System Report. Though Seiver created the model nearly 30 years ago, he recently co-authored an academic study of the model’s effectiveness that appears in the current issue of the Journal of Wealth Management.
Seiver’s model is based on a single number that is published each week in the famed Value Line Investment Survey, published by Value Line, Inc. The number represents the median of the projections made by Value Line’s analysts of where the 1,700 widely followed stocks they closely monitor will be trading in three to five years’ time. Followers refer to this number as the VLMAP, which stands for Value Line’s Median Appreciation Potential.
The model Seiver devised using VLMAP considers the risk-reward ratio for stocks to be attractive enough to warrant investing new money in the market only when it rises to at least 100. When it drops to 55, in contrast, it’s time to begin building up cash.
The VLMAP recently dropped to just 35%. The last time it was this low was in July 2007. At the top bull market in October of that year, it stood at 40%.
As Seiver recently pointed out to his clients, the VLMAP’s current level “puts it in the worst 5% of all readings since 1966. In the past, a level as low as this has preceded months or years of poor stock returns. We doubt this time will be different.”
To be sure, Seiver’s model is not a short-term market-timing tool. As he pointed out the last time I wrote a column about it, “the stock market can continue to rise for months, if not years, after a sell reading.” Indeed, as documented in his Journal of Wealth Management study, it’s over a four-year horizon that the model has impressive forecasting powers.
- Hussman Weekly Market Comment: Pushing Luck
Link to: Pushing LuckThe latest data from the NYSE shows equity margin debt at a new all-time high. Relative to GDP, the current 2.6% level was eclipsed only once – at the March 2000 market peak. In the context of the most extreme bullish sentiment...
- Hussman Weekly Market Comment: The Truth Does Not Change According To Our Ability To Stomach It
Our estimate of prospective 10-year nominal S&P 500 total returns has eroded to just 2.3%, suggesting that equities are likely to underperform even the relatively low returns available on 10-year Treasury bonds in the coming decade. Those estimates...
- The Flaws In The Fed Model
Found via The Big Picture. There are perfectly reasonable arguments that can support an upbeat outlook on the stock market. Unfortunately for crafters and consumers of sound bites, one of the simplest and most popular bullish assertions is irrelevant....
- Nucor Stock Analysis
Nucor (NUE) operates mini-mills in the steel process. I recently ran their numbers through my spreadsheet and I'm fairly intrigued by the possibilities. Especially since I think the global economy is improving and the demand for steel should increase...
- Jnj Stock Analysis
I've started to try and consolidate my stock analysis spreadsheets to make it easier for myself to cruch numbers. I like JNJ and would love to get in but right now it seems that it's a little overvalued and there's just too many question marks...