Lilguy

Valuing Stocks During a Recession

I use fundamental analysis to help me in making investment decisions, and it is consistently a great "plus" in that effort. So, I appreciate your POV on the infinite timeframe cash flow horizon.

Still, I find it almost impossible to see around the corner, that is, the next market upturn (or downturn in happier times). As a result, I tend to use fundamentals, especially PE ratios, as a way to look at the intermediate term. This enables me to consider the earnings issues you mention and their implication for price. Other things being equal (a rare occurrence), I find that a combination of a low PE ratio, a high dividend yield (ie--higher than USG or bank CD returns) from companies with a long history of steady or increasing dividends, and sound prospects for participating in an economic recovery (I won't be in ANF) whenever it comes makes for the basis of a pretty good quantitative valuation analysis.