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Median Valuation

Jan 06 2018

Estimating The Upside?

  • Jan 6, 2018

The remarkable stock market breadth and momentum chronicled in these pages doesn’t come without a price.

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.

Sep 08 2016

Sizing Up Small Caps

  • Sep 8, 2016

While the most inflated domestic-valuation readings are found in the Large Cap realm, the market rebound has driven the median 12-month trailing P/E in our Small Cap universe to 22.5x (Chart 1)—less than a point away from the June 2015 all-time high of 23.3x.

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.”

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.

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%.
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.

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

The Median P/E Valuation Benchmark

  • Mar 5, 2008

When stocks get back to median valuation levels, the odds are the stock market is at or close to its lows.

Feb 05 2008

The Historical Significance Of Median P/E Valuations

  • Feb 5, 2008

70% of all the market declines since 1945 (post WWII), bottomed within 10% of the median historical normalized P/E ratio.

Jan 05 2003

Is The Stock Market's Current P/E Dangerously High?

  • Jan 5, 2003

It is possible for new bull markets to emerge from high P/E levels. Earnings are cyclical, so when earnings decline in a recession, it can mark a very good buying opportunity despite high P/Es.

Oct 04 2002

Case For A Bear Market Bottom

  • Oct 4, 2002

I now think the stock market will record its secular bear market lows between now and Thanksgiving. It’s time right now to start an equity accumulation program.

Aug 05 2002

Why We Conclude Equities Are No Longer Overvalued

  • Aug 5, 2002

Explanation of how we use historical valuations to compare to today.

Dec 05 1998

I’m Still Afraid of Heights

  • Dec 5, 1998

Intrinsic Value benchmarks for each stock market average, using 1957 to date data. Using 1926 to date data the calculations are even more frightening.

Jun 03 1998

Valuations in Low Inflation Environments

  • Jun 3, 1998

Low inflation environments versus “new era” valuations. Examining low inflation environments only, with our “Upside/Downside” factors, there is still 34%+ downside to median valuation levels (1957 to date).

Aug 05 1995

Watch Out Below

  • Aug 5, 1995

Four possible upsets to bullish complacency.