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URL:  https://boards.fool.com/arezi-ratio-for-sep-28-34628297.aspx

Subject:  Arezi Ratio for Sep 28 Date:  9/27/2020  4:57 PM
Author:  elann Number:  279121 of 279634


* 9/7 9/14 9/21 9/28/20
S&P 500 Index 3426.96 3340.97 3319.47 3298.46
Trailing 12 month PE 36.05 35.59 35.47 35.34
Trail Earnings yield 2.77% 2.81% 2.82% 2.83%
Forward 12 month PE 25.02 25.29 24.96 24.64
Fwd Earnings Yield 4.00% 3.95% 4.01% 4.06%
90 day tbill yield 0.11 0.11 0.10 0.10
10 year tbond yield 0.72% 0.67% 0.70% 0.66%
Arezi Ratio 0.04 0.04 0.03 0.03
Fed Ratio 0.18 0.17 0.17 0.16




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 118%
stocks, -18% cash this week.


Other timing indicators:
The S&P index is above its 200DMA. - Bullish
We are in the May-Oct part of the year. - Bearish
The trailing PE ratio of the S&P is above 17. - Bearish
The treasury yield curve is normal. - Bullish

A composite allocation may start with the Arezi formula and subtract 10%
for each bearish indicator. The current target allocation is 98%.

An alternative allocation, using S=120-30*Arezi Ratio and the first
two of the other timing indicators, produces a target of 109%.

Elan
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