Join Early Retirement Today
Reply
 
Thread Tools Display Modes
Morningstar market valuation graph
Old 01-21-2008, 05:33 AM   #1
Full time employment: Posting here.
Delawaredave5's Avatar
 
Join Date: Dec 2004
Posts: 699
Morningstar market valuation graph

I've been watching this M* "market valuation graph" the last bunch of years.

Morningstar.com: Market Valuation Graph

I haven't fully tried to understand methodology how they get valuations - and I don't know how "forward looking" they are.

Looks like we're at 0.85 now, with "all time low" since data started of 0.78 in 2002.

So I'm suprised we're already approaching 2000-2002 "undervaluation levels". But watch how valuations can "bump positive" and then drop again.

And valuations can go up by one of two things happening:
1. Stock prices increasing, and
2. Company earnings falling

This information plus $4 might get you an overpriced "latte sprittzo" at Starbucks.....
Delawaredave5 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 01-21-2008, 07:14 AM   #2
Recycles dryer sheets
 
Join Date: Dec 2005
Posts: 137
Something people aren't discussing on this group is that we're in an earnings recession. Forget the economy for the moment, corporate earnings have been on a tear (due to the 2001 stimulus and other factors) and are at an all time high. Or, that is, were at an all time high. They've been steadily trending down since I believe last summer.

Now add to that the effects of the housing bust, overspent consumer, etc., and you get an idea why stock markets are so upset
danm is offline   Reply With Quote
Old 01-21-2008, 09:34 AM   #3
Recycles dryer sheets
ikubak's Avatar
 
Join Date: Dec 2007
Posts: 482
Quote:
Originally Posted by Delawaredave5 View Post
I've been watching this M* "market valuation graph" the last bunch of years.

Morningstar.com: Market Valuation Graph

I haven't fully tried to understand methodology how they get valuations - and I don't know how "forward looking" they are.

Looks like we're at 0.85 now, with "all time low" since data started of 0.78 in 2002.

So I'm suprised we're already approaching 2000-2002 "undervaluation levels". But watch how valuations can "bump positive" and then drop again.

And valuations can go up by one of two things happening:
1. Stock prices increasing, and
2. Company earnings falling

This information plus $4 might get you an overpriced "latte sprittzo" at Starbucks.....

I review that graph at least monthly. I too am surprised by how undervalued some stocks are. Another couple of months like January and we will be at low valuations (based on this graph) not seen since 2002-2003.
__________________
Retire date Jan. 10, 2018
ikubak is offline   Reply With Quote
Old 01-21-2008, 09:35 AM   #4
Thinks s/he gets paid by the post
 
Join Date: Jul 2005
Posts: 4,366
That is just Mornimgstar's opinion. If you look at some of their stock fair values, they can be revised over time to follow the stock price. EBAY was one I think that showed M* was not exactly prescient in their valuations. They increased their valuation dramatically after the price of EBAY had already reached those levels. It would have been more use if they had valued EBAY highly and then the stock price caught up!

It is a bottoms up valuation of the market, but we don't know what economic assumptions they are making and if any recent events may effect M*'s valuation. It would be kind of a bummer if their valuation went down to match the market instead of the market going back up! I think a consumer spending lull due to no savings and too much debt (in aggregate) might not be in their scenario.

While I certainly wouldn't rely on M* alone, I think they do have some credibility. I don't think the markets will go down and stay down. They should recover after some period of time, and I think (and M* apparently thinks) they will make up for this lost ground at that time. More of a dip than a step. They key question is how much and how long?

Dan
Animorph is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
indexing SWR to inflation or to valuation perinova FIRE and Money 16 05-15-2006 05:48 PM
Need Help With Valuation F-One FIRE and Money 5 02-07-2006 04:33 AM

» Quick Links

 
All times are GMT -6. The time now is 12:32 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.