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"Risk comes from not knowing what you're doing" Warren Buffett I look and sift the world for such misplaced bets. When I occasionally find one, I first exploit it for profit. Then, I write about it for anyone else interested in such ideas. Twitter: @unemon1 Scribd:... More
  • SP500 Index, A Quick Overview At Recent History Valuations. 0 comments
    Apr 26, 2014 2:54 PM | about stocks: SPXL

    Approximately Fair Valued … now economic growth is needed to boost prices. Time to rethink allocation towards more economic-growth sensitive sectors (bb momentum).

    Multiples Overview at Calendar Year End:

    Current SPX500 Index prices implied by historical Multiples.

    For Example, by taking the Price/Earnings Multiple observed at the end of CY1990, today the SPX500 Index should be trading at 1,666.67 points.

    Where Current SPX Price is 1,863 and the Average Historical Implied SPX Price is 1930.88 (representing a 3.64% upside Potential).

    Given Current Street Forecasts for CY2014 and CY2015, if traded at "historical average Multiples" the SPX is expected to trade at 1944.79 at the end of CY2014 (4.40% upside) and at 2115.20 at the end of CY 2015 (15.68% upside).

    Currently SPX does seem to be "Fair Valued" (not overvalued but also not undervalued). As long as the Economic recovery remains intact, buy the DIP seems the less dangerous strategy to follow.

    When I first performed this kind of comparison back in 2011 the situation looked a lot better from a wanna-be-long perspective:

    Where Current SPX Price was at 1,259 and the Average Historical Implied SPX Price was 1573.32 (representing a 24.96% upside Potential).

    Stocks: SPXL
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