Eddy Elfenbein

Valuations Ahead, Not Behind

Goldman recently raised their 2010 estimate to $75.

www.bloomberg.com/apps...

What Football Teaches Us About Risk Management

The article compensates for that by only looking at data from the first and third quarters. You really ought to read a study before you criticize it.

More Innumeracy from Jeremy Siegal

I don't blame the book on him, and he criticized the book as well. But G&H based their idea on Siegal's mistake.

The spelling has been corrected in the original post. Thanks.

Comparing Stability of Dividends and Stock Prices over Time

David & Prudent,

Thanks for the comments! Actual both numbers are right but slightly different series. Mine is the trailing four-quarter per-share total. The numbers David lists are the quarterly dollar totals. That's why the drop off on my blue line isn't as severe.

Incidentally, S&P just updated the numbers so the Q2 numbers are my chart are 919.32 for the black line, and 25.59 for the blue line. I should add that the blue line will most likely continue to fall for a few more quarters.

Thanks for your thoughtful feedback. This is how Seeking Alpha helps clarify issues for investors. - Eddy

Studying the Dow / S&P 500 Ratio

Wrong Rob. Just because the indexes are calculated differently doesn't negate the importance of comparisons. Different sets of data are always compared, from debt ratios to price/earnings ratio. The important lesson is what kinds of inferences can you draw from these comparisons.

Studying the Dow / S&P 500 Ratio

Tuj, the point is that the Dow would be 3,000 points higher if it had kept pace with the S&P 500. Dude! Also, you can see that the normal relationship broke down during the tech bubble and its deflating. These relationships don't always hold up so well.

Leucadia Buys Stake in Jeffries as Banks Turn to Private Equity

Leucadia is spelled correctly.

www.leucadia.com/

Also, a preposition is something you shouldn't end your sentences with.

Stocks vs. Bonds: A Surprising Result

That's not correct. The line on the chart is of long-term corporate bonds. The source is Ibbotson Associates. I've stretched it out by 2% a year to see how well that level of premium competes with stocks. In my opinion, it does fairly well.

Why 'Say on Pay' Should Not Be Required of Companies

My article is corrected.

www.crossingwallstreet...

Stocks vs. Bonds: A Surprising Result

Sorry Mister Bill, the chart is correct.

Stocks vs. Bonds: A Surprising Result

Given the volatility of the premium for stocks, I don't think 2.1% is much of a reward. Over the last 10 years, corporate bonds have still outperformed stocks.

Collapse of the Yield Curve

The Fed Funds rate is at 3%. Despite the cuts, the three-month and five-year rate are still will below the Fed.

A Note to the Bubble-Phobes

Thanks for the comments. A number of you pointed out that it isn't that difficult to spot bubbles. I agree with two caveats. One is that you can spot bubbles based on historical comparisons. What if those have changed? The markets dividend yield was often higher than long-term interest rates, now it never is. Going by the old metrics, we've been in a bubble for decades.

That brings me to my second point that even if we're in a bubble, that doesn't mean the bubble won't continue to get worse (or better depending on your point of view). Alan Greenspan's famous "irrational exuberance" comments came years before the market reached its peak. The market may revert to the mean, but it may time a long time getting there. Spotting a bubble is a lot easier than spotting a top.

Thanks again for these very astute comments!

Is This the End of the Small-Cap Cycle?

I don't believe it's a long-term change, but these cycles aren't always in sync with the economy. Large-caps had their day from 1994 to 1999 when the economy did very well. There's also a currency impact since larger companies, as a whole, are more internationally focused.

How Does Inflation Impact Stocks?

I used the CPI from the government. I know there are many criticisms of this index, but it's the only one I have.

I apologize for any confusion about the chart but there's no easy way to graph it. The blue line shows the cumulative gain of the S&P 500 going by the rate of inflation (low to high being left to right).

In the deflationary period at the beginning, the market drops. Then between -5% and +5%, it rises very dramatically, Then it levels off and falls dramatically.