Robert Shiller's revered stock market valuation ratio, the so-called CAPE, is crappy at predicting 12-month returns. Here's proof.Read More »
We estimate that a 'fair price' for the market is a Shiller PE of around 16. With the market at close to a Shiller PE of 26, the market is overvalued by about 60%. Now is not a historically good time to initiate a position in the S&P500.Read More »
What Does Current Global Crisis Comparison with Those of '08 and '10 Mean for Stocks, Bonds, Currencies and Commodities?
How does the current behavior of the global financial markets compare with the two recent crises, namely the great financial crisis of 2008/2009 and the minor one in 2010 when the sovereign debt crisis in the eurozone developed? [I have analyzed 15 aspects of the markets and have concluded that over the next 2/3 months we should see, among other things, increased volatility, declining S&P 500 and MSCI World indices, a bottoming in the 10-year U.S. Treasuries yield, renewed U.S. dollar weakness, renewed strength in the price of gold and silver with silver outperforming that of gold. Take a look at the 19 charts below to see for yourself.] Words: 825Read More »
[We have determined that] the current cyclically adjusted real yield of 5.28% is telling us that the stock market is expensive, at least by historical standards. [In addition,] ...we have also determined that, relative to bonds, the real spread between stocks and bonds is 7.2% in terms of yields, i.e., stocks relative to bonds seem cheap. If stocks are expensive, and stocks relative to bonds seem cheap, this implies that bonds are also expensive. Everything is expensive! [Let me show you the math that confirms just that.] Words: 1590Read More »