Bet you won’t. wrote:
Ghost of Igloi wrote:
The article is filled with so many inaccuracies and misinterpretations it is a joke.
Please point out three. Thanks.
Why don’t you use one of your other registered handles you puss?
1. “The only time CAPE suggested stocks have not been overvalued in the last 25 years was in 2009 when it implied stocks were fairly valued.”
That is an incorrect interpretation of what CAPE 10 implies.
2. “According to FactSet 2017 earnings are projected to be $131.37.”
CAPE 10 uses GAAP EPS which in the most recent completed quarter (9/30/2017) was tracking at $107.08 on a last twelve months basis.
3. “The market’s forward earnings multiple is 17.7 according to FactSet, but some would argue the market is expensive.”
The most recently completed quarter of 9/30/2017 shows a non-GAAP earnings multiple of 21.25 and GAAP of 23.53. GAAP EPS for the last twelve months (LTM) ending 9/30/2017 was $107.08 or an increase of $1.12 over the previous LTM historic high recorded on 9/30/2014 of $105.96. Therefore the author’s numbers are wrong first by using non-GAAP estimates rather than GAAP actual EPS. Secondly, he takes inflated EPS to come up with a wildly optimistic projection of future S&P 500 price target.
Even if we were to take the author’s view on face value, it does not diminish the fact that at current valuations the market is likely to experience intermediate losses in excess of 50%.
Well there you go and yes I did.
Igy