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Stock yields versus Bond yields - stocks are still more attractive!

When comparing US treasury bond yields with stock yields (1/ market P/E) then you currently get a ratio of around 3.25. And while this ratio has been in favor of stocks since 2003, the last time it has been this high was in 1980, if we exclude the financial crisis. The interesting part is that whenever the momentum has changed in the past in favor of stocks at these current levels then usually the outperformance continued for at least another month or two. In the attached chart you can see the areas around the current level highlighted by arrows. You can see how the acceleration continued in favor of stocks. The chart is green when stocks are more attractive and red when it is the other way around.  





Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.