Introduction While the holiday season has long been regarded as a time of excess, folks this year are bracing for another challenge besides annual waistline expansion: price inflation. As we gather with family and friends for the holidays in coming weeks many are predicting that this year’s turkey will be the…

Introduction The Price-to-Earnings (PE) Ratio is perhaps the simplest and most classic measure of a stock’s value. This method for valuing a company measures its current share price relative to its earnings per share (EPS). …

Introduction Initially popularized by the legendary investor Warren Buffet, the Buffet Indicator is the ratio of US stock market capitalization to Nominal Gross Domestic Product (GDP). As a valuation metric the Buffet Indicator asks a simple question: “how valuable are public stocks compared to 1-year of economic output?”. As of July…

In 2006, Meb Faber wrote a highly influential paper on tactical asset allocation and market timing. The strategy was particularly attractive in part because of its simplicity: Buy when monthly price > 10-month SMA Sell and move to cash when monthly price < 10-month SMA By applying this simple, mechanical…

It’s no secret that 2021 has started off well for Bitcoin. Having breached a new all time high of $61,788.45 on March 13th it seems that each passing month brings with it a new milestone, new players, and greater acceptance. Recently, significant news has focused on the pace of institutional…

Much has been written about the Federal Reserve in recent months. Indeed, much of the discourse has focused on expansion of the Fed’s balance sheet and the consequences it has for asset prices, purchasing power and the Dollar. These concerns are not without justification after all, with the Fed’s balance…

Building on the work of Robert Shiller, in recent posts I investigated the use of the CAPE ratio to predict future stock market performance and examine for the structural change in market valuation over time. …

In “ Stock Market Valuation and the 2020’s in R “ I investigated whether the CAPE ratio could forecast the future trajectory of earnings and/or stock returns over the period 1980–2019. From this study, we made a couple of observations: The CAPE ratio cannot be used to forecast future earnings…

I’ve been thinking about valuations a lot lately. If you’ve been following the stock market in recent months, then you will doubtlessly be aware that the past 6-months have witnessed a historic 44% rally across global markets. This rally has drawn particular attention because it has been dominated by tech…