A US Stock Valuation Disagreement
So that guy Mark Hulbert was saying the other day that Ford Equity Research thinks that the darned old US stock market is overvalued, based on Ford's Price/Intrinsic Value calculations.
P/E ratios for the S&P 500 certainly do tell a different story. In the valuation spreadsheet, we see that stock price-to-earnings ratios are at or below their historical averages across a host of earnings metrics. Borrowing a page from the old Fed Model, we also see that the 5.86% "earnings yield" of the market is well above the 4.54% yield for the 10-year Treasury Note and that it even beats the composite rate for 10-year AAA-rated corporate bonds.
Perhaps some day I will see the guts of the "Intrinsic Value" model and will be enlightened, but since I am a traditional stock investor who is buying shares of the future earnings of these companies, I will settle for some nasty old P/E ratios, which are now showing the overall market spot on fair value, if not undervalued as the Siegel and Yardeni camps insist.