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Strategies & Market Trends : Complacency Indexes
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To: TechTrader42 who wrote (1189)5/8/2002 5:49:58 PM
From: ajtj99  Read Replies (3) of 1487
 
Brooke, the Fed model of market valuation is related to the T-Bills. When the T-Bill yield goes up, P/E's need to move down in order to be competitive with the T-Bill yield.

If the Yield is 5%, the 2003 P/E needs to be 20 or below in order to be fairly valued. If the yield is 4%, a P/E of 25 on the S&P is fairly valued according to the Fed model.

Bond yields up, bad for stocks.

Have you seen this triangle? Jeff posted it to me, and I've seen Vessilin reference it also on the QQQ (with an implied target of 22.76):

stockwerld.com
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