| | | S&P500 yield LT schrts.co
1.7-2.2% LT range. Excursions outside that range are temporary.
1.34% = yield today
1.11% = min, 8/2000
14% = max, 6/1932
3410 = SPX yielding 1.7%
2635 = SPX yielding 2.2%
Similar calculations can be made, using PE (with ttm, trailing 10y, or forward earnings), P/S.
Conclusion: today’s valuations are sustainable, only as long as QE, trillion-$ deficits, and extremely low LT interest rates continue. When they end, stocks will at best go sideways till earnings increase enough to lower valuations. I am guessing this return to normal valuations won’t happen in 2021. 2022 at the earliest, and more likely 2023. Could even be later. I will stay alert for warning signs, and get steadily more defensive as I see them. In the meantime, I will sell the rallies, buy the dips, and collect dividends. |
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