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URL:  https://boards.fool.com/arezi-ratio-for-jan-21-34113916.aspx

Subject:  Arezi Ratio for Jan 21 Date:  1/19/2019  3:25 PM
Author:  elann Number:  273135 of 275333


* 12/31 1/7 1/14 1/21/19
S&P 500 Index 2485.74 2531.94 2596.26 2670.71
Trailing 12 month PE 17.74 18.07 18.53 19.10
Trail Earnings yield 5.64% 5.53% 5.40% 5.24%
Forward 12 month PE 15.91 16.18 16.73 17.34
Fwd Earnings Yield 6.29% 6.18% 5.98% 5.77%
90 day tbill yield 2.40 2.42 2.43 2.41
10 year tbond yield 2.72% 2.67% 2.71% 2.79%
Arezi Ratio 0.43 0.44 0.45 0.46
Fed Ratio 0.43 0.43 0.45 0.48



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 97%
stocks, 3% cash this week.


Other timing indicators:
The S&P index is below its 200DMA. - Bearish
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 77%.

An alternative allocation, using S=120-30*Arezi Ratio and the first
two of the other timing indicators, produces a target of 96%.

Elan
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