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P/E Ratios

Jun 19 2020

It’s Demographics, Stupid! (Not The Economy.)

  • Jun 19, 2020

Turn on financial television at any random time, and you’re likely to soon hear the argument that still-high U.S. stock market valuations are “justified” by extremely-low interest rates. We’ve countered that these low U.S. rates are simply a reflection of the secular slowdown in economic and earnings growth.

Jan 08 2020

For Value Investors Only!

  • Jan 8, 2020

With the possible diminution of “alpha” in price momentum strategies, we recommend that sector allocators consider approaches that are more countertrend or contrarian in nature.

Dec 06 2019

No Place Like Home For The 2010s

  • Dec 6, 2019

We thought we’d get a jump on all the “End of the 2010s” retrospectives you’re sure to see next month. Though not quite yet the official end of the decade, the changing of the “tens” digit definitely has a certain gravitas to it.

Oct 25 2019

Low Rates Don’t Justify Higher P/E Ratios (And U.S. Investors Should Be Glad)

  • Oct 25, 2019

The fear (or hope) that U.S. bond yields would fall to zero or below subsided over the last month. However, the belief that low yields merit significantly above-average P/E ratios remains stronger than ever.

 

Aug 07 2019

Low Vol For All Seasons?

  • Aug 7, 2019

The early August setback took the S&P 500 below its late-January 2018 high—and the time when we first trimmed net equity exposure in Leuthold tactical funds from a nearly fully-invested posture.

Jun 07 2019

The Small Cap Discount Deepens

  • Jun 7, 2019

Small Caps typically underperform during a bull market’s final phase, and our findings with respect to the Output Gap aid our understanding of that phenomenon.

Mar 15 2019

Be Wary Of The “E” In P/E

  • Mar 15, 2019

U.S. equity valuations remain considerably higher than those of any major foreign market, but there’s no denying they’ve improved from the cyclical peak made in January 2018. That’s true across the capitalization spectrum, and on the basis of both normalized and non-normalized fundamentals.

 

Nov 07 2018

Think Halloween Is Behind Us? Beware, Zombie Alert!

  • Nov 7, 2018

“Zombie” companies are being kept alive by low interest rates and generous credit conditions, and the number of them, worldwide, has risen significantly over the past few years.

Nov 07 2018

P/E Crash!!

  • Nov 7, 2018

While this year’s liquidity squeeze has yet to exact the toll we ultimately expect on the U.S. stock mar-ket, it has certainly contributed to a sharp compression in P/E multiples.

Nov 07 2017

Revisiting The Y2K Highs

  • Nov 7, 2017

Bobby Knight thought coaching would be perfect “if it weren’t for those damned games.”

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?

Jul 08 2017

Today Versus The Tech Bubble Peak

  • Jul 8, 2017

We’ve generally spoken of the market’s “broad participation” as a good thing. And from a purely technical point of view, it is.

May 05 2017

How To (Almost) Double Your Money In Under Ten Years

  • May 5, 2017

Buying the S&P 500 on one of the worst possible days in history ultimately yielded a total return of +87.4% (+6.8% annualized) through the end of April 2017...darn, sounds like an advert for Vanguard!

Sep 08 2016

A Semi-Annual Checkup!

  • Sep 8, 2016

Call off the mortician, and bring on the pediatrician for the bull market’s 7 1/2-year checkup this month.

Sep 08 2016

Same Ponds, Different Fish?

  • Sep 8, 2016

The impact of atypically-high current valuations has become a challenge for style-box investing. High quality, mature dividend payers have habitually resided in the Value and Blend boxes, but investors have bid up those valuations as they look for alternatives to low bond yields.

Aug 05 2016

No Sector On Sale...

  • Aug 5, 2016

While cap-weighted U.S. indexes remain far below their 2000 valuation highs, in some ways today’s market presents an even more difficult hurdle for value managers.

Jul 08 2016

Low Vol Divergence, Episode 3

  • Jul 8, 2016

The divergence between S&P 500 Low Volatility and High Beta Indexes has emerged for the 3rd time in a year. The 3-month performance spread is even more extreme than it had been on the eve of either the August or December stock market air pockets.

Aug 07 2014

Small Cap Premium Finally Shrinks—But Remains Historically Extreme

  • Aug 7, 2014

July’s Russell 2000 -6% rout finally deflated some of the Small Cap valuation premium we’ve been grousing about in recent years.

Jul 08 2014

Small Cap Valuation Check

  • Jul 8, 2014

Small Caps have staged a nice rebound in the last several weeks. On July 3rd, the Russell 2000 rose to within a fraction of an index point of its March 4th all-time high. But on a relative strength basis, the bounce has been pretty muted.