Sentences with phrase «of valuation measures»

They also look expensive on a broader range of valuation measures.

On the basis of valuation measures most tightly related to actual subsequent long - term market returns, we also estimate that the S&P 500 is likely to be lower 12 years from now, compared with current levels, though dividend income may push the total return just over zero on that horizon.

Investing based on size, measured by company market capitalization, would use only the price side of the valuation measure.

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.

Not exact matches

So if we look at a range of market valuation measures, whether it's Shiller CAPE, whether its price - to - book, whether it's price - to - trailing earnings, price - to - peak earnings, when we look at these measures, they look like they're in the, what we would call, the 10th decile, meaning generally, valuations are cheaper 90 % of the time.

Since 1980, tech companies have gone public with average price - to - sales ratios of 5.8, so by that measure valuations aren't out of whack.

By one closely watched measure of valuation, Alan Greenspan's irrational exuberance warning should be keeping investors near the sell button.

Price: The price of an opportunity can be measured by the expected ROI and the relative valuation of the company compared to similar alternatives.

Given that valuations were already rich when the VIX, a commonly used measure of S&P 500 volatility, was at 10, a doubling of volatility suggests stocks should be trading closer to 16 or 17 times earnings, not 21.

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

When valuations exceeded even 12 times normalized earnings (on our most comprehensive measure discussed above), seemingly «favorable» market action was followed by profound losses averaging -69.8 % on an annualized basis (generally reflecting a few weeks of vertical losses until enough damage was done to kick the market action measures negative).

Moderate interest rates were associated with a whole range of subsequent returns over the following decade, and we know that those outcomes were 90 % correlated with the level of valuations at the beginning of those periods (on reliable measures such as market cap / GDP, price / revenue, Tobin's Q, the margin - adjusted Shiller P / E, and others we've presented over time - see Ockham's Razor and the Market Cycle).

This is done by indexing property valuations (typically provided at the time a loan is originated) by a measure of housing prices and accounting for offset balances.

Along with the steepest equity valuations in U.S. history outside of 1929 and 2000 (on measures that are actually reliably correlated with subsequent market returns), private and public debt burdens have reached the most extreme levels in history.

The problem is when investors adopt theories and models that embed the most optimistic assumptions possible, run contrary to historical evidence, or embed subtle peculiarities that actually drive the results (see, for example, the «novel valuation measures» section of The Diva is Already Singing).

As always, the strongest prospective market return / risk profile is associated with a material retreat in valuations followed by an early improvement in broad measures of market internals.

The results below are specific to methods we actually use, but I expect that they could be broadly replicated using any basic combination of valuations (say, Shiller PEs), and market action (say, moving averages or breadth measures).

«On the other hand, using the same essential measures of valuation and market action, but including periods of major economic dislocation into the dataset, produces average return / risk inferences that are substantially less favorable.

It turns out that he is still right, and the effect of being right is that equities are far more overvalued than may be evident even on measures like the Shiller CAPE (see An Open Letter to the FOMC: Recognizing the Valuation Bubble in Equities).

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.

In any event, our measures of trend uniformity are clearly unfavorable here, as are valuations.

In the face of constant cheerleading in 2000 based on theories and valuation measures that were historically unfounded, I wrote in February of that year:

The Sector Scorecard's proprietary methodology measures the relative attractiveness of each sector as measured by 4 key factors: business cycle, fundamentals, relative valuations, and relative strength.

It's common to object to the dividend yield as a measure of valuation, given that companies have devoted more of their earnings to stock repurchases than dividend payments in recent years.

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).

For all the reasons listed above, the correlation between these two factors is actually very weak, as demonstrated by Tim Koller, Jack Murrin, and Thomas E. Copeland in Valuation: Measuring and Managing the Value of Companies (p. 80).

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.

Only with a real grasp on the true cash flows of the business can one get an accurate measure of the future cash flow growth implied by the stock's valuation.

Figure 2 compares Skechers to a number of other shoe / apparel companies in the «Athleisure» segment across measures of profitability, growth, and valuation.

Market - Implied Duration of Growth (Growth Appreciation Period) measures the number of years of future profit growth required to justify the current valuation of the stock.

-- on this measure of startup valuations and exits, Barcelona's ecosystem is 56 percent larger than the global median.

Presently, wicked valuations are coupled with still - unfavorable market internals on our measures, and have now been joined by the most extreme «overvalued, overbought, overbullish» syndrome of conditions we identify.

The economic gains and market returns that emerged during the Reagan Administration began from a starting point of 10.8 % unemployment, a current account surplus, and market valuations that - on the most historically reliable measures - were less than one - quarter of present levels.

None of that would even require the most historically reliable valuation measures to break below their pre-bubble norms.

With the S&P 500 within about 8 % of its highest level in history, with historically reliable valuation measures at obscene levels, implying near - zero 10 - 12 year S&P 500 nominal total returns; with an extended period of extreme overvalued, overbought, overbullish conditions replaced by deterioration in market internals that signal a clear shift toward risk - aversion among investors; with credit spreads on low - grade debt blowing out to multi-year highs; and with leading economic measures deteriorating rapidly, we continue to classify market conditions within the most hostile return / risk profile we identify — a classification that has been observed in only about 9 % of history.

Among the valuation measures most tightly correlated across history with actual subsequent S&P 500 total returns, the ratio of market capitalization to corporate gross value added would now have to retreat by nearly 60 % simply to reach its pre-bubble average.

We've long argued, and continue to assert, that the most historically reliable measures of market valuation are far beyond double their historical norms.

The essential thing to understand about valuations is that while they are highly reliable measures of prospective long - term market returns (particularly over 10 - 12 year horizons), and of potential downside risk over the completion of any market cycle, valuations are also nearly useless over shorter segments of the market cycle.

Historically - reliable valuation measures are remarkably useful in projecting long - term and full - cycle market outcomes, but the behavior of the market over shorter segments of the market cycle is driven by the psychological inclination of investors toward speculation or risk - aversion.

Second, our own admitted difficulty in the advancing period since 2009 did not reflect a shortfall in either our measures of valuation or our measures of market internals.

Even if the growth rates of nominal GDP and U.S. corporate revenues (including foreign revenues) over the coming 20 years match their 4 % growth rate of the past 20 years, and even if the most reliable valuation measures merely touch their historical norms 20 years from today, the S&P 500 Index two decades from now will trade more than 20 % lower than where it trades today.

These measures include the S&P 500 price / revenue ratio, the Margin - Adjusted CAPE (our more reliable variant of Robert Shiller's cyclically - adjusted P / E), and MarketCap / GVA — the ratio of nonfinancial market capitalization to corporate gross value - added, including estimated foreign revenues — which is easily the most reliable valuation measure we've ever created or tested, among scores of alternatives.

Last week, the U.S. equity market climbed to the steepest valuation level in history, based on the valuation measures most highly correlated with actual subsequent S&P 500 10 - 12 year total returns, across a century of market cycles.

The Market Climate remains on a Crash Warning, characterized by extremely unfavorable valuations, unfavorable trend uniformity, and hostile yield trends, particularly long - term bond yields and various measures of risk premiums.

This does not, for even a moment, change the fact that the most reliable measures of valuation are now an average of 3.0 times their historical norms.

Although Wall Street continues to assert that valuations are «reasonable given the level of interest rates,» keep in mind that the most reliable measures of valuation imply negative 10 - 12 year total returns for the S&P 500.

By March 2000, on the basis of historically reliable valuation measures, I projected that a retreat to normal valuations would require an -83 % plunge in tech stocks.

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).

While we prefer to compare market capitalization with corporate gross value added, including estimated foreign revenues, the following chart provides a longer historical perspective of where reliable valuation measures stand at present.