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Jan 07 2022

Weigh Those Bags Before Checkout

  • Jan 7, 2022

You’ve likely heard of “shrinkflation,” the practice in which a package of M&M’s is reduced from 40 pieces to 32, while the price per bag is unchanged. Publicly-traded companies have been engaged in similar schemes for awhile.

Mar 19 2021

A Flight Of Wee Dragons

  • Mar 19, 2021

In our mid-month Of Special Interest, “Valuation Extremes: Here Be Dragons,” we examined valuation outliers as a measure of market sentiment. The hypothesis was that exuberance is reflected in investors’ willingness to hold stocks priced on an aggressive “vision” of the future; companies that are either habitually unprofitable or trade at a Price/Sales ratio above 15x.

Mar 17 2021

Valuation Extremes: Here Be Dragons

  • Mar 17, 2021

Top decile valuations are often the result of unduly positive investor sentiment that leads to inflated multiples. Bullishness comes in varying strengths: optimism, enthusiasm, exuberance, and, at the extreme, the mania of crowds. Because bullishness manifests itself in aggressive valuations for speculative companies, we believe the prices being applied to such companies - for which intrinsic value is dependent on a future that looks significantly different than today - are an excellent measure of investor sentiment. In that spirit, we examined past cycles of extreme valuations with the goal of understanding how they relate to investor sentiment and what they might tell us about market conditions and relative returns.

Mar 04 2021

Research Preview: A Tale Of Two Tails

  • Mar 4, 2021

Top decile valuations, such as those in place today, are usually the result of excessively positive investor sentiment that leads to inflated multiples. Bullishness comes in varying strengths: optimism, enthusiasm, exuberance, and, at the extreme, the mania of crowds. Leuthold research typically tracks valuation sentiment by examining median P/E ratios, but in this study, we are taking the opposite tack. Rather than looking at medians, we are focusing on the outliers in each tail of the valuation distribution.

Dec 05 2020

A “Fed” Conundrum

  • Dec 5, 2020

“Don’t fight the Fed” has been great advice for stock market investors over the last nine months. For 2021, that won’t cut it. It should be: “Don’t believe the Fed.”

Mar 07 2019

A Scary Chart, Revisited

  • Mar 7, 2019

For a couple years, we’ve labeled the S&P 500 Price/Sales ratio as the scariest chart in the Leuthold database, and last year’s decline did little to improve its intimidating appearance.

Dec 21 2018

Market Observations

  • Dec 21, 2018

It’s been one of the worst years on record for diversification, with our hypothetical All Asset No Authority (AANA) portfolio down 7.2% YTD through yesterday. That’s the second-worst year for AANA since 1972, and there’s probably not enough time left for performance to undercut 2008 (-24.9%) for the bottom spot.


Aug 03 2018

No, It’s Not Y2K Again…But The Lights Could Still Go Out

  • Aug 3, 2018

For the last year, we have labeled the S&P 500 Price/Sales ratio—which has returned to its Y2K bubble levels—the “scariest chart in our database” (Chart 1). Recall that the initial visit to present levels was followed by the S&P 500’s first-ever negative total return decade.


Feb 07 2018

Multiple Contraction—Just A Little Patience?

  • Feb 7, 2018

Things were bigger when you were a kid. Like that enormous sweatshirt your aunt gave you for your birthday or that hand-me-down ten-speed bike with the cross bar taller than your shoulders.

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.

Jan 06 2018

Kicking Off The Year... With A Good Year

  • Jan 6, 2018

During the first four trading days of 2018, the S&P 500 managed to match its 93-year average annual real price gain of +2.6%.

Dec 07 2017

Value: Scarcer Than In 2000

  • Dec 7, 2017

Comparing current valuations to March 2000 is unfair to March 2000. Any Value or Small Cap manager from that era can attest that values became more plentiful as the S&P ascended into its narrow peak.

Dec 07 2017

Stock Market Observations

  • Dec 7, 2017

Economic and momentum considerations have kept us mostly aboard this bull for much longer than our value-seeking inner selves would have otherwise allowed.

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.”

Aug 05 2016

Long On Equities, Light On Conviction

  • Aug 5, 2016

In the wake of the tech wreck and the housing bust, usage of the term bubble by the media and market pundits has become increasingly liberal.

Nov 06 2015

To Play The Rally, Or Not To Play?

  • Nov 6, 2015

Question: What will you do if the Major Trend Index returns to its bullish zone?

Jun 06 2014

Running The Math On Mega Caps

  • Jun 6, 2014

The recent move by the S&P 100 Index (OEX) above its historic March 2000 high prompted us to take a closer look at the turnaround potential of this perennially underperforming Mega Cap index. Remember, a Large Cap leadership cycle has been in force since April 2011—with the trend strengthening the last few months. What are the prospects for the biggest of the Big Caps?

Mar 06 2014

Estimating The Downside - March 2014

  • Mar 6, 2014

BACK TO THE MEDIANS (1957 To Date): S&P 500 13% Downside

The S&P 500 gained 4.3% (price only) in February. Based on the 1957-to-date valuation metrics presented below, the S&P 500 has 13% downside to its historical average. The S&P Industrials (which excludes Utilities and Financials) now has 26% downside to reach mean valuation.  

Jan 08 2014

2013 Factor Performance Review

  • Jan 8, 2014

2013 ended up being a good year for quantitative strategies, particularly those that focus on using Momentum

Jul 04 2006

Health Care's Top 20 Stocks

  • Jul 4, 2006

Highlight on the Health Care sector: Relative Valuations, Top Twenty Components, P/E Ratios, PSR, and Gross Profit Margins.

May 03 2006

Checking In On The Tech Top 20–Valuations Remain Reasonable

  • May 3, 2006

The twenty biggest Tech stocks were flat in April, but remain up 7% YTD on a median basis.

Feb 05 2006

Tech Watch Revisited – Examining The Bullish Case For Info Tech

  • Feb 5, 2006

Technology continues to be a hot topic. This month’s “Inside The Stock Market” takes an objective look at the Tech sector.

Oct 05 2004

Growth Stocks: Where The Value Is

  • Oct 5, 2004

Large Cap Growth stocks are now cheap relative to Large Cap Value. Value segment still leads over Growth among the Small Caps and among the Mid Caps.

Oct 05 2004

Sector Spotlight...on Technology

  • Oct 5, 2004

Looking for Q4 tactical trading opportunities in Tech.

Dec 03 2003

Price To Sales Ratios....Are Small Caps Still Significantly Cheaper?

  • Dec 3, 2003

On a price to sales basis, small caps sold at 43% discount to large caps at the end of 1999, but this has virtually disappeared in the past four years of strong small cap performance.

Jul 04 2003

Tech Watch

  • Jul 4, 2003

This may be one of the few sectors that has the opportunity to provide 20% or more growth in 2003. If inves­tors can get over their fears, they could be rewarded by the Tech sector.

Mar 05 1998

Trying To Rationalize Today’s Stock Market Valuations

  • Mar 5, 1998

Bullish conclusions using today’s low inflation levels and today’s “low” bond yields are derived from very short-term, historical time horizons. Longer term studies do not support these conclusions.

Nov 05 1995

High Tech…No Wreck Yet

  • Nov 5, 1995

Fat profit margins are stimulating competition and capacity which will ultimately bring margins (and tech stocks) down. Technology fragmenting, but the end is not quite yet in sight.

Sep 05 1995

Comparing Technology Manias (Updated)

  • Sep 5, 1995

“Tech” manias revisited: comparing P/E ratios and Price/Sales ratios.