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Downside

Jan 08 2019

Guess-timating The Downside

  • Jan 8, 2019

While our market disciplines remain negative, we certainly aren’t oblivious to the haircut in equity valuations that’s already occurred.

Nov 16 2018

Correction Creating Values?

  • Nov 16, 2018

While the consensus view remains that October’s stock market rout was “healthy” and “overdue,” we think it was  more likely the first leg down of much larger decline. But it’s still worth reviewing the improvement in valuations that market losses and this year’s excellent fundamentals have combined to produce.  

 

Oct 05 2018

The Two-Tiered Global Market

  • Oct 5, 2018

We should emphasize that our characterization of stocks as dangerously overvalued applies only to the U.S. market.

Oct 05 2018

Estimating The Downside: The G-Rated Version

  • Oct 5, 2018

The longevity of this bull market is impacting tactical asset allocators in ways great and small.

Jul 07 2018

An Old Chart Whose Time Has Come?

  • Jul 7, 2018

No, it’s not a 1990s-like love affair with the stock market. But it’s surely a sign of the times when TV pundits seem to have dropped even passing references to valuation when spinning their mostly bullish market yarns.

Oct 06 2017

Dialing In On Downside Risks

  • Oct 6, 2017

Question: Your “Estimating The Downside” section shows the S&P 500 would lose 26% if it reverts to its 1957-to-date median valuation level. The downside estimate for the S&P Industrials Index, however, is almost -40%. Why such a huge difference?

May 05 2017

Estimating The Downside

  • May 5, 2017

We remain cyclically bullish on equities, but nonetheless like to engage in occasional downside “target practice” to shape our expectations for the next bear market.

Apr 21 2017

Don’t Call It A Bubble

  • Apr 21, 2017

Thanks to reasonable valuations outside the United States, our work finds global equities only moderately above their long-term valuation norms. 

Feb 07 2017

Estimating the Downside - February 2017

  • Feb 7, 2017

The S&P 500 gained 1.9% in January. Based on the 1957-to-date valuation metrics presented, the potential downside compared to its historical average remained the same as last month’s reading (-21%).

Oct 07 2016

Foreign Equities: Cure For Altitude Sickness?

  • Oct 7, 2016

When we complain about the stock market’s inflated valuation levels, we’re unintentionally giving short shrift to the 50% of the global-market capitalization that resides outside the U.S. We’d be hard-pressed to describe the valuation of Developed foreign markets as any higher than neutral.

Aug 05 2016

Bubble Or Not?

  • Aug 5, 2016

To revisit the all-time valuation peak of March 2000, the S&P 500 would have to reach 3455 (not a forecast!). A reversion to 1957-to-date median valuations implies an S&P 500 loss of 22%. That’s a serious loss, but hardly on the order of a “busted bubble.”

Jul 08 2016

Estimating the Downside - July 2016

  • Jul 8, 2016

Back to the medians (1957 to date): S&P 500 19% downside.

Mar 08 2016

Another Look At Median Valuations

  • Mar 8, 2016

While the past several months’ reversion in valuation measures has certainly wrung some of the risk out of the market, if the bear market reasserts itself and drives stocks to valuations seen at average cycle lows, downside risks are still substantial.

Feb 05 2016

Estimating the Downside - February 2016

  • Feb 5, 2016

The S&P Industrials’ downside to mean valuation (excludes Utilities and Financials) is 24%, about 3% less than last month’s reading.

Jan 08 2016

Estimating the Downside - January 2016

  • Jan 8, 2016

The S&P 500 lost 1.8% (price only) in December. Based on the 1957-to-date valuation metrics presented, downside to its historical average decreased by about 2% from last month’s –19% reading.

Dec 08 2015

Estimating The Downside

  • Dec 8, 2015

Following August’s market break, we produced a set of potential downside targets derived from a mix of technical retracements, “average” bear market declines, and an assumed reversion-to-the-median in S&P 500 valuations. Little has changed here.

Nov 06 2015

Estimating the Downside - November 2015

  • Nov 6, 2015

BACK TO THE MEDIANS (1957 To Date): S&P 500 18% Downside

The S&P 500 gained 8.3% (price only) in October. Based on the 1957-to-date valuation metrics presented below, downside to its historical average increased by about 6% from last month’s –12% reading. The S&P Industrials’ downside to mean valuation (excludes Utilities and Financials) is 30%, about 3% greater than last month’s reading.

Sep 09 2015

How Far Could It Fall?

  • Sep 9, 2015
Our valuation work shows many “garden variety” cyclical bear markets bottom out fairly close to long-term median valuation levels on the S&P 500. A reversion to median valuations would entail a peak-to-trough S&P 500 loss of –21.1%.
Sep 09 2015

"Oversold" Doesn't Mean BUY

  • Sep 9, 2015
Some of the worst declines in market history occurred after conventional market momentum readings first became deeply oversold—including 1987 and the last half of the 2008-09 collapse.
Feb 05 2015

Estimating The Downside - February 2015

  • Feb 5, 2015

The S&P 500 lost 3.1% (price only) in January. Based on the 1957-to-date valuation metrics presented below, downside to its historical average decreased by about 1% from last month’s reading of –15%.

Jan 08 2015

Estimating The Downside - January 2015

  • Jan 8, 2015

The S&P 500 lost 0.4% (price only) in December. Based on the 1957-to-date valuation metrics presented below, downside to its historical average decreased by about 1% from last month’s reading of –16%.

Dec 05 2014

Broadly Expensive — Downside To Past Market Highs (And Lows)

  • Dec 5, 2014

The median S&P 500 stock is now expensive enough that we’re able to estimate its potential downside to prior bull market highs! Based on an average of four valuation measures, the median stock needs to drop about –11% to match the typical valuations at the eve of a cyclical bear market.

Oct 08 2013

Estimating Downside - October 2013

  • Oct 8, 2013

The S&P 500 gained 3.0% (price only) in September. Based on the valuation metrics presented in the table below, the S&P 500 has 9% downside to reach its historical average. The S&P Industrials (excludes Utilities and Financials) now has 22% downside to reach mean valuation.

Sep 10 2013

Estimating The Downside - September 2013

  • Sep 10, 2013

The S&P 500 lost 3.1% (price only) in August. Based on the valuation metrics presented in the table below, the S&P 500 is 8% above its historical average. The S&P Industrials (excludes Utilities and Financials) now has 20% downside to reach mean valuation.

Aug 06 2013

Estimating The Downside - August 2013

  • Aug 6, 2013

The S&P 500 gained 4.9% (price only) in July. Based on the valuation metrics presented in the table below, the S&P 500 is 12% above its historical average. S&P Industrials (excludes Utilities and Financials) now have 21% downside to reach mean valuation.

Mar 05 2008

Profit Margins In Retreat....The Mathematics Of The Downside

  • Mar 5, 2008

Profit margins contracting. Assuming margins fall back to median historical levels, this implies a market decline of about 18%.

 

Aug 05 2006

Weekly New High/New Low Data Not Yet Indicating A Stock Market Bottom

  • Aug 5, 2006

We meticulously comb through the lists of weekly new highs and new lows so that we exclude those derivatives and non-operating companies, in order to get a true picture of the stock market health.

Jun 05 2006

View From The North Country

  • Jun 5, 2006

We may or may not be close to entering a new cyclical bear market, but as we view it, the risk has risen significantly.

Nov 05 2005

View From The North Country

  • Nov 5, 2005

The perils of speculation in Housing…..lessons people are now learning. Also, client questions....and Leuthold's answers.

May 04 2005

Constructing A History Of The "Estimating The Downside" Calculation

  • May 4, 2005

Historical tracking of our multi-factor valuation model.

Jul 03 2002

No Capitulation Yet

  • Jul 3, 2002

The stock market's decline has been relentless and now even Small Caps have joined the retreat. But, while mutual fund investors have been skittish, they have not panicked up to now. Also, is this a Secular Bear Market?

Nov 04 2000

Technology: What’s The Downside?

  • Nov 4, 2000

Not even the mighty techs are immune to saturation, overcapacity, cyclicality, and fierce competition.

Dec 05 1996

In “Never Never Land”

  • Dec 5, 1996

It’s “Never Never Land”...stock market now above all past valuation extremes. Ultimately, a big bear market is out there, but shorter term it may go higher.

Jul 05 1996

Estimating Current Stock Market Downside

  • Jul 5, 1996

Leuthold current studies show significant downside potential from current levels. Today’s market valuation now more extreme than 1987’s, and far above historical medians.

May 05 1996

Major Stock Market Positives and Negatives

  • May 5, 1996

A review of the significant stock market positives and negatives as I currently see them. There are now five major positives and five major negatives.

May 05 1996

Estimating Current Stock Market Downside

  • May 5, 1996

Current studies show significant downside potential from current levels. Today's market valuation now more extreme than 1987's, and far above historical medians.

Apr 05 1996

Major Stock Market Positives and Negatives

  • Apr 5, 1996

A review of the significant stock market positives and negatives as I currently see them. There are now five major positives and five major negatives.

Feb 05 1996

Major Stock Market Positives and Negatives

  • Feb 5, 1996

During the month of January, two major stock market positive factors became more positive, three remained about the same, and one became less positive. Among the four negative factors, all four became more negative.

Oct 05 1995

Comparing the 1987 Stock Market Peak With Today

  • Oct 5, 1995

Recent market discussion has centered around comparisons of today’s stock market with 1987. In order to summarize the comparisons, we have put together a table containing over 30 factors that have stock market significance.

May 05 1994

A Fresh Look at Upside and Downside Potential

  • May 5, 1994

Even after the March correction, this valuation exercise uncovers only limited upside (+15% to 1987 peaks) and significant downside (-25%, back to median valuations).