Posts filed under “Investing”
Relative to this morning’s column, consider this discussion about inflation and valuation:
From Savita Subramanian:
Inflation: The level of inflation also matters, and historically has had a strong relationship with PE multiples. Chart 2 below indicates that the relationship may not be linear, but many have simplified this relationship to the “Rule of 21” which suggests that the sum of the PE multiple and CPI inflation should equal 21. Given that the latest inflation data are slightly negative (-0.2%) and the trailing PE ratio of 17.6x, the Rule suggests valuations should jump 3-4 points, or that inflation should be 3-4% (or some meeting in the middle). And the chart below indicates that P/E multiples could be far higher than they are today without breaching the historical relationship between multiples and inflation.
Episode I: High valuations
Savita Subramanian, Equity & Quant Strategist
Equity and Quant Strategy | United States 26 May 2015
Traders returning to their desks after the long holiday weekend will be greeted by the continuing Greek saga, a guessing game about when the Federal Reserve will raise rates and a megamerger in the cable industry. But the debate I am much more interested in is the one taking place about U.S. stock valuations. It is more…Read More
I love this debate between the idea of Tobin’s Q-Ratio as th be all for valuation analysis. It is embodied between Smithers & Co. quoted in this scary BBRG article and Pragmatic Capitalism’s Cullen Roche. Here is PragCap: “Better yet, look at the number of times this ratio has been cited during the most recent bull market…Read More
The data on this is fascinating:
Many people plan on supplementing their retirement funds by working past 65, but this plan may not be as sound as it seems. Bloomberg’s Suzanne Woolley breaks down the expectations and often unfortunate truths of working through retirement.
Source: Bloomberg May 18, 2015 7:32 AM EDT
“We are not done on the cost side . . . We think we need to keep raising the bar on that.” So says Bill McNabb, CEO and Chairman of the Vanguard Group. The firm, managing over $3.1 trillion dollars in client monies, has long been known for its obsessive focus on keeping costs low….Read More
Tren Griffin runs 25IQ, a blog about business models, investing, technology, and other aspects of life that he find interesting. He works for Microsoft; Previously he was a partner at Eagle River, a private equity firm established by Craig McCaw. ~~~ A Dozen Things I have Learned from Barry Ritholtz about Investing As part of my “A Dozen Things…Read More
“Men in the game are blind to what men looking on see clearly.” ~ Chinese Proverb In the game of investing, the players are often the ones who are unknowingly being played… The phrase, caught up in the game, can be attributed to “blind ambition” and the emotional trappings that accompany the desire to win….Read More
I love this collection of Paul Tudor Jones insights and rules by way of Ivanhoff Capital: 13 Insights From Paul Tudor Jones 1. Markets have consistently experienced “100-year events” every five years. While I spend a significant amount of my time on analytics and collecting fundamental information, at the end of the day, I am…Read More