ROE
Land Of The Rising Stock
After years of wandering in the wilderness, Japanese stocks are leading the world’s developed markets higher in what has been a robust opening half of the year. The table shows Japan leading the world’s ten largest developed markets (as measured by the MSCI family of international indexes) with a 24% local currency return through June, easily outpacing the pack. Even as the MSCI USA index gained 17% by successfully “fighting the Fed” this year, Japan surged another 7% beyond that outstanding result. We were curious to understand the nature of Japan’s spectacular run in 2023, looking to identify the drivers of this strong and relatively quick jump higher.
A Pricey Alternative To The S&P 500?
This month we focus on the valuations of the MSCI USA Index—which is nearly identical to the S&P 500. This is worth following mainly because the folks at MSCI are kind enough to provide us with much longer-term histories of Cash Flow and Book Value Per Share.
Momentum: “New Junk” In The “Old Trunk”
.png?fit=fillmax&w=222&bg=FFFFFF)
March 23rd marked the one-year anniversary of the COVID-19 bear-market bottom. We are all eager to turn the page on the pandemic ordeal and move forward to brighter days ahead. Looks like some big help is coming our way.
Global Valuations Rising, But U.S. Still At A Premium
The large valuation discount on foreign shares has narrowed a bit, reflecting better relative action in foreign shares over the past 14 months and relatively weaker foreign fundamentals.
Leuthold Stock Quality Rankings
Our Stock Quality Rankings currently show that stocks with Low Quality rankings outperformed those with High Quality rankings.
Leuthold Stock Quality Rankings: Starting To Favor Low Quality
Our Stock Quality Ranking work currently shows stocks with low quality rankings outperforming those with high quality rankings.
Decomposing ROE: A Global Perspective
Return On Equity (ROE) has been performing well as a quality factor on a global basis over the last six to twelve months.
An Explanation For The Confusing S&P 500 Book Value Revision?
We still have been unable to get a satisfactory explanation from Standard & Poor’s of why and how they revised their Book Value calculation. The revisions were huge and had a significant impact on our valuation metrics.
S&P Announces Huge Upward Revision In Book Value Calculations…..Without Explanation
We remain confused by the huge revisions without a valid explanation.
Avoiding 1991’s P/E Trap
While operating earnings may even now be on the road to recovery, an accounting rule change could produce a virtual earnings wipeout in fourth quarter reported earnings.
Using Book Value in Analysis
In terms of stock screening, companies selling far below book value raise a red flag and deserve very close critical scrutiny. However, when book value is used in combination with other value considerations it can be helpful in recognizing undervalued stocks.
current issue
