UnThreaded | Threaded | Whole Thread (1) | Ignore Thread Prev Thread | Next Thread
Author: elann Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 253809  
Subject: Arezi Ratio for Mar. 25 Date: 3/22/2013 11:52 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 14

* 3/4 3/11 3/18 3/25/13
S&P 500 Index 1518.20 1551.18 1560.70 1556.89
Trailing 12 month PE 17.05 17.39 17.78 17.64
Trail Earnings yield 5.87% 5.75% 5.62% 5.67%
Forward 12 month PE 13.39 13.62 13.64 13.61
Fwd Earnings Yield 7.47% 7.34% 7.33% 7.35%
90 day tbill yield 0.11 0.10 0.09 0.07
10 year tbond yield 1.86 2.06 2.01 1.93
Arezi Ratio 0.019 0.017 0.016 0.012
Fed Ratio 0.25 0.28 0.27 0.26



The Arezi Ratio is the 90 day tbill yield divided by the trailing
earnings yield of the S&P500. A low ratio means that stocks are undervalued.

The "Fed Ratio" is the 10 year treasury bond yield divided by the
forward estimated operating earnings yield of the S&P500. A low ratio
means that stocks are undervalued. Thus, a ratio of 0.71 for example
means, according to Yardeni, that stocks are cheaper than "fair value"
by 29%.

The 'S=120-50*Arezi Ratio' formula indicates an allocation of 119%
stocks, -19% cash this week.


Other timing indicators:
The S&P index is above its 200DMA. - Bullish
We are in the Nov-Apr part of the year. - Bullish
The trailing PE ratio of the S&P is above 17. - Bearish
The treasury yield curve is normal (not inverted). - Bullish

A composite allocation may start with the Arezi formula and subtract 10%
for each bearish indicator. The current target allocation is 109%.

An alternative allocation, using S=120-30*Arezi Ratio and the first
two of the other timing indicators, produces a target of 120%.

Elan
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post Back To Top
UnThreaded | Threaded | Whole Thread (1) | Ignore Thread Prev Thread | Next Thread
Advertisement