Week of May 29, 2017: Equity Valuations, our take…
Almost every day a new opinion surfaces in the financial press about the valuation of the current US Equity market. To gain clarity on the subject, many years ago we developed our own analysis and method for assessing Equity valuations: our own proprietary* guessing apparatus
Chart: Courtesy of Windsor Wealth.
So, if the RED line sits under the BLUE line equity are likely to decline, according to this method.The opposite is true if the Red line is above the Blue line. How accurate is this method? There are very few things that are absolute; this is not one of them. However, the inflection points, the lines crossing, is indicative of a change in the character of the equity markets, we believe. So what is it telling us?
We believe equity markets are bullish and, for the foreseeable future, remain so. Having said that, the environment for equities is very different that a couple of years ago when valuations were not even remotely an issue. Today we think investment selection is more important, passive management, or investing in a broad index less so; there is less room for error.
Our portfolios and strategies reflect overweighted positions in US Equities.
Carlos Dominguez, CFP® – Portfolio Manager
*The advisors at The Windsor Wealth. LLC., developed a proprietary analysis and method based on earnings, actual and estimated as well as interest rate levels to ascertain possible inflection points in the US Equity Market.
Sources: The S&P Indices and S&P Global Co. – Earnings, actual and estimated as well as S&P historical prices. The Federal Reserve Bank of St. Louis for Interest rate data
Sources are being provided for information purposes only. Raymond James is not affiliated with and does not, authorize, or sponsor any of the listed sources. Raymond James is not responsible for the content of any source or the collection or use of information regarding any source’s users and/or members. Past performance may not be indicative of future results. The S&P 500 is an unmanaged index of 500 widely held stocks that is considered representative of the U.S. stock Market. Inclusion of these indexes is for illustrative purposes only. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor’s results will vary. Any opinions are those of Carlos Dominguez and not necessarily those of Raymond James. This material is being provided for information purposes only and is not a complete description, nor recommendation. The information has been obtained from sources considered reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Investing involves risk and you may incur a profit or loss regardless of strategy selected. There is no guarantee that any statements, opinions or forecasts proveded herein will prove to be correct.