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Strategies & Market Trends : Value Investing
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To: William Cloutier who wrote (59994)10/23/2017 2:57:11 PM
From: E_K_S1 Recommendation

Recommended By
research1234

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Based on your estimates, DOW is 28% overvalued at 23,318

In your equations, it's all about interest rates & future earnings. Try another calculation. Using your formula, what 10 year interest rate is need to show a fairly valued dow at 23K.

I have not done the math but I bet the 10 year interest rate would be near 2.5%.

Today the 10 year treasury rate is 2.33%

Mr. Market is probably looking at future earnings (including YoY modest growth), low inflation and low long term interest rates. If you look back 10 years, interest rates were mostly determined by QE.

Buffet looks at the 10 year corporate bond rate but I believe he sees earnings and their growth a bigger factor. He does not like leveraged/high debt investments (at most 4x annual net income = total debt).

Good investing

EKS
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