Why the Stock Market Valuation Matters Before a Recession? When the stock market is VERY overvalued before a recession, it tends to be VERY undervalued. Like the swing of a pendulum, or the stretching of a rubber band, sooner or later it comes back very violently. This happened in 1973, 2000 and 2008. The US…
https://www.isabelnet.com/wp-content/uploads/2019/03/stock-market-valuation.mp4 This powerful model looks into the US stock market and alerts if it is overvalued or undervalued The model shows the valuation percentage to the right and to the left. In the middle, it shows what the probability of each event happening is. Probability is a way to show how often an event will…
U.S. Market – Earnings, Valuation and Equity Risk Premium This chart shows that the P/E ratio is above average, but the equity risk premium is relatively high. Picture source: Fidelity Investments
U.S. Stock Market – Earnings and Valuation The valuation is high relative to history, but not near historical extremes. The U.S. stock market should remain under pressure until Q3 earnings season. Picture source: Fidelity Investments
Valuation – U.S. Stock Market Capitalization-to-GDP The U.S. stock market capitalization-to-GDP is a general gauge of market valuation, but it’s not very useful for short-term market timing. Picture source: Bloomberg
Leon Cooperman: Bull Market Cycles Don’t End at Fair Valuation, They Ended at Overvaluation “There is still more room for the market to run. We have a slowdown but not a recession and the market is ok.” Leon Cooperman (Omega Advisors founder) is a great value investor. https://www.youtube.com/watch?v=Xz6ihkuW1AM
MSCI World Index Valuation at Cycle Peaks and Troughs On average, the MSCI World Index currently trades at a price-to-earnings ratio that has marked cyclical peaks in the stock market over the past 50 years. Picture source: Charles Schwab
S&P 500 Valuation This chart shows that the S&P 500 is in a trading range rather than in a bearish or bullish market trend, for more than 20 months. Picture source: Fidelity Investments
Earnings, Dividends and Valuation Considering earnings growth, dividends and valuation, the U.S. stock market should remain under pressure until Q3 earnings season. Picture source: Fidelity Investments
Stock Plus Bond Market Capitalization as a Percentage of Nominal GDP The current reading is pretty high at 274.47%. You may also like the “Stock Market Valuation” and “S&P 500 Index – Earnings & Valuation.” Picture source: Bianco Research
