Sentences with phrase «good valuation measures»

While we certainly believe there are better valuation measures than the Shiller P / E (particularly MarketCap / GVA), we use it below because it is widely followed.

Not exact matches

Our long - term forecasts are based on our assessment of current valuation measures, economic growth and inflation prospects, as well as historical risk premiums.

While a number of simple measures of valuation have also been useful over the years, even metrics such as price - to - peak earnings have been skewed by the unusual profit margins we observed at the 2007 peak, which were about 50 % above the historical norm - reflecting the combination of booming and highly leveraged financial sector profits as well as wide margins in cyclical and commodity - oriented industries.

There will always be conceptual issues with any single valuation measure, so the best we can do is evaluate valuations from the standpoint of multiple historically reliable approaches.

As always, the best opportunities are likely to emerge when a material retreat in valuations is joined by an early improvement in our measures of market action (which, following our stress - testing earlier in this half - cycle, are robust to every market cycle we've observed across history).

At Berkshire Hathaway's recent annual shareholders meeting, an investor asked Buffett about the relevance of two popular measures of stock market value: 1) market cap - to - GDP, which Buffett once heralded as «probably the best single measure of where valuations stand at any given moment» and 2) the cyclically - adjusted price - earnings ratio (CAPE), which was made famous by Nobel prize winner Robert Shiller and was seen as accurately predicting the dot - com bubble and the housing bubble.

At present, the valuation measures that we find best correlated with actual subsequent S&P 500 total returns are at the most offensive levels in history, matching or eclipsing the 1929 and 2000 extremes.

The most reliable measures of individual stock valuation we've found are based on formal discounted cash flow considerations, but among publicly - available measures we've evaluated, price / revenue ratios are better correlated with actual subsequent returns than price / earnings ratios (though normalized profit margins and other factors are obviously necessary to make cross-sectional comparisons).

Despite my admitted stumble in the half - cycle since 2009, it's perplexing that the equity market is at the second greatest valuation extreme in the history of the United States, on what are objectively the most durably reliable valuation measures available, but it has somehow become an affront to suggest that this will not end well.

ROIC is the best measure of corporate performance and has the most direct link to valuation.

As usual, I don't place too much emphasis on this sort of forecast, but to the extent that I make any comments at all about the outlook for 2006, the bottom line is this: 1) we can't rule out modest potential for stock appreciation, which would require the maintenance or expansion of already high price / peak earnings multiples; 2) we also should recognize an uncomfortably large potential for market losses, particularly given that the current bull market has now outlived the median and average bull, yet at higher valuations than most bulls have achieved, a flat yield curve with rising interest rate pressures, an extended period of internal divergence as measured by breadth and other market action, and complacency at best and excessive bullishness at worst, as measured by various sentiment indicators; 3) there is a moderate but still not compelling risk of an oncoming recession, which would become more of a factor if we observe a substantial widening of credit spreads and weakness in the ISM Purchasing Managers Index in the months ahead, and; 4) there remains substantial potential for U.S. dollar weakness coupled with «unexpectedly» persistent inflation pressures, particularly if we do observe economic weakness.

For example, our effort to carefully account for the impact of foreign revenues, and to create an apples - to - apples measure of general equity valuation led us to introduce MarketCap / GVA, which is better correlated with actual subsequent 10 - 12 year market returns than any of scores of measures we've studied.

Indeed, if improvement in market internals is joined by a material retreat in valuations, we would expect to shift to a constructive or aggressive outlook (even if valuation measures were still well - above historical norms).

That's fine, but understand that through most of the period prior to the 1960's, interest rates regularly visited levels similar to the present, yet these same measures of stock valuations typically resided at well below half of present levels.

Instead, they've run their finances conservatively enough that they can sit on depressed valuations for years at a time, knowing that they are still earning a good rate of return when measured as the cash flow that belongs to them relative to the price they paid for their ownership stake.

Undoubtedly, the best outcome would be a strong improvement in valuations, followed by signs of improvement in our measures of market action, which is the typical sequence of events that complete a market cycle and can launch a very favorable investment environment.

The current valuation of the S&P 500 is lofty by almost any measure, both for the aggregate market as well as the median stock: (1) The P / E ratio; (2) the current P / E expansion cycle; (3) EV / Sales; (4) EV / EBITDA; (5) Free Cash Flow yield; (6) Price / Book as well as the ROE and P / B relationship; and compared with the levels of (6) inflation; (7) nominal 10 - year Treasury yields; and (8) real interest rates.

As of last week, the Market Climate for stocks was characterized by unusually unfavorable valuations and unfavorable market action (a deterioration from the prior week, primarily on the basis of interest - sensitive securities such as bonds and utilities, as well as measures of breadth and distribution).

Of particular interest are a host of debt and financing measures as well as overheated stock - market valuations.

Since no such sharing is possible, economists must eschew any valuation other than that of favoring an increase in overall well - being as measured by overall income.

As details emerge of the measures Coutinho took to push through his Nou Camp transfer — committing # 11.5 million of his own cash to meet Liverpool's valuation — his former club are considering how best to move on from his loss.

«More than unearthing deficiencies in the 2017 analysis, our evaluation signals a need for improved protocols in developing valuation measures, as well as government - research - community partnerships to support timely and credible environmental policy analyses,» said Boyle.

That is why I focus on longer term valuation measures among short - term valuation measures that are neutral at best at present, Mean - reversion eventually takes hold.

The best single valuation measure was the price - to - sales ratio.

Undoubtedly, the best outcome would be a strong improvement in valuations, followed by signs of improvement in our measures of market action, which is the typical sequence of events that complete a market cycle and can launch a very favorable investment environment.

His measure of valuation P / E10, which is the best that I have found so far, is still at 1929 levels, around 27.

There are several good choices for the measure of valuation.

On long - term measures of value (for example, Graham's 10 - year trailing P / E ratio and corporate profits as a proportion of GDP) market prices are well below average and approaching all time lows (See Future Blind «s post Market Valuation Charts prepared in October last year when the S&P 500 was around 1160).

The equity market is well above where long - term valuation measures like the Q - ratio, and CAPE10 would value it.

Book value is considered a better measure of valuation than earnings by many investors including legendary investor Martin Whitman.

In 2001, the Oracle of Omaha dubbed it as ``... the best single measure of where valuations stand at any given moment.»

More measured valuation shifts are more emotionally balanced and thus more likely to generate good real - world results.

[I have found Professor Robert Shiller's P / E10 to be the best single measure of valuation so far.

It's called Valuation - Informed Indexers Don't Have Good or Bad Years — We Measure Success Over 10 - Year Time - Periods.

Thank goodness the relationship is weak, as current valuations for low beta stocks are well into the top decile of historical experience regardless of the valuation measure used.

We observe that P / B - based valuation does a better job of forecasting the return of the value blend factor, whereas the aggregate valuation measure does a better job of forecasting the return of the value strategy constructed based on B / P.

I have found Professor Robert Shiller's P / E10 to be the best single measure of valuation so far.

As with valuation measures, there are lots of sentiment indicators as well.

Despite my admitted stumble in the half - cycle since 2009, it's perplexing that the equity market is at the second greatest valuation extreme in the history of the United States, on what are objectively the most durably reliable valuation measures available, but it has somehow become an affront to suggest that this will not end well.

Warren Buffett stated that market capitalization as a percentage of GDP is «probably the best single measure of where valuations stand at any given moment.»

My point is that there are a variety of highly predictive, methodologically distinct measures of market - level valuation (I used the Shiller PE and Tobin's q, but GNP or GDP - to - total market capitalization below work equally as well) that point to overvaluation.

This is the best measure of valuation that I have found so far.

Enterprise Value is often cited as a better measure of valuation than Market Capitalization.

Here, I'll discuss how home bias is measured, the factors that underpin this phenomenon, and why it's probably a good idea to expand your horizons a bit — especially given current valuations.»

The big lesson we learned is that the Monte Carlo method gives a very good measure of the reliability of the valuation arrived at by CAPM.

The valuation of a property is typically determined by an appraiser, but a better measure is an arms - length transaction between a willing buyer and a willing seller.