Dow @ 20K. Time to jump off!
POSTED BY: JO753
UPDATED: Friday, April 4, 2025 13:08
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PAGE 111 of 119
This widely used stock valuation measure says the S&P 500 is 35% overpriced
Stock analyst’s discounted cash flow model calculation pegs S&P 500 fair value at 1,800
(S&P 500 closed today at 2,790. 35% = 1.0 – 1800/2790)
The discounted cash flow (DCF) model is widely used to assess the potential worth of not just stocks but any asset. DCF calculates the present value of future cash flows the asset produces. The key variable in the model is the discount rate — the amount by which we discount amounts that may be earned in the future. The higher the discount rate, the less that future cash flows are worth today.
(To be sure, Deluard had to make a number of other assumptions as well. But playing around with those assumptions turned out to have far less impact on the S&P 500’s value than changing the discount rate. For the record, Deluard assumed that corporate revenues in the first quarter of 2020 will be 25% lower than their year-ago 2019 level and 50% lower in the second quarter. He then assumed that revenues would start to recover and, by the end of 2021, would be back to their pre-COVID-19 trend. He also assumed that the 10-year Treasury yield would be steady at 0.8%, which is close to where it stands today.)
Implied discount rate | S&P 500’s fair value
10.0% | 1,800 (10% is current estimate)
9.8% | 1,851 (9.8% is the long-term average)
8.6% | 2,237
7.7% | 2,600
6.2% | 3,386 (Feb. 19 high)
Here’s how to read Deluard’s results: Given his assumptions, the S&P 500 would have been fairly valued at its Feb. 19 high if we assume a discount rate of 6.2%. If we instead assume a discount rate that is equal to the long-term average, then the S&P 500’s fair value falls to 1,851 — 45% lower than its Feb. 19 high.
The discussion up until this point leads us to the crucial question: How much has the stock market’s discount rate grown since the coronavirus outbreak?
Deluard says that the bond market has already answered the question: The spread between investment grade bond yields and the risk-free rate has increased by between 1.5 and 2 percentage points, while high-yield bond spreads have risen by between 5 and 7 percentage points. The average of these is 3.8 percentage points, and if we add that average to the implied rate at the Feb. 19 high, we get a discount rate of 10.0%.
That translates to an S&P 500 fair value of 1,800.
www.marketwatch.com/story/this-well-known-measure-puts-the-sp-500-at-3
5-overvalued-2020-04-13
The Joss Whedon script for Serenity, where Wash lives, is Serenity-190pages.pdf at www.mediafire.com/folder/1uwh75oa407q8/Firefly
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Quote:
Originally posted by THG:Quote:
Originally posted by 6IXSTRINGJACK:Quote:
Originally posted by THG:Quote:
Originally posted by 6IXSTRINGJACK:Quote:
Originally posted by THG:Quote:
Originally posted by 6IXSTRINGJACK:
Yup. Kind of exactly like you and T having nothing at all to say in JSF's DOW thread until the market tanked.
Exactly like it. Yup.
Dow @ 20K. Time to jump off!
POSTED BY: JO753
UPDATED: Monday, April 13, 2020 10:41
SHORT URL:
VIEWED: 34927
PAGE 22 of 22
T
Deep state describes dedicated, educated professionals.
Yeah? What's your point, Ted?
CURRENT DOW: 23,146.94
I'm no fan of the DOW, and I think it's gambling even during good times.
But I won't pass up an opportunity to call you idiots out whenever you serve it up on a silver platter for me.
Do Right, Be Right. :)
Recently you admitted to wish that Kevin was your name.
lol. No I didn't. A deep Google search of my handle and previous post history doesn't show that either, although she claims I said it at some point. I've talked about Kevin Spacey, Kevin Kostner and quoted some links Second has posted that were written by some lefty shill named Kevin Drum, but I've never said my name was Kevin.
That's fine though. I'm alright with the idea that you all think my name is Kevin. You'll have as good of a chance doxxing me one day if you try to find a Kevin in Indiana as you would Jack.
Quote:
Who is Ted?
Ted Bundy. That's your nickname now. You earned it.
Quote:
If you think that is my name you should back it up with some evidence. Otherwise, I'll know you're just pissed off about your ID being made public, my knowing it, and you are lashing out.
lol sure. But that's not the case here. Please, refer to me as Kevin. Kev is fine too.
Do Right, Be Right. :)
OK I see. Then you are calling me Ted because you're upset and are lashing out. Go for it kev.
T
Deep state describes dedicated, educated professionals.
No, Ted.
You know why your name is Ted. This isn't a new thing. This has been your new name since you started goading people into committing suicide and suggesting that it was funny when others who aren't here might have.
You're gross. Ted.
Do Right, Be Right. :)
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Quote:Strategist sees S&P 500 tumbling to as low as 1,275 before a bull market can resume
Originally posted by second:
That translates to an S&P 500 fair value of 1,800.
www.marketwatch.com/story/this-well-known-measure-puts-the-sp-500-at-3
5-overvalued-2020-04-13
(Yesterday, S&P500 closed at 2,762)
www.marketwatch.com/story/why-the-stock-market-is-nowhere-near-a-botto
m-and-investors-can-expect-a-massive-hit-2020-04-13?mod=article_inline
The Joss Whedon script for Serenity, where Wash lives, is Serenity-190pages.pdf at www.mediafire.com/folder/1uwh75oa407q8/Firefly
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Quote:
Originally posted by second:
Strategist sees S&P 500 tumbling to as low as 1,275 before a bull market can resume
(Yesterday, S&P500 closed at 2,762)
www.marketwatch.com/story/why-the-stock-market-is-nowhere-near-a-botto
m-and-investors-can-expect-a-massive-hit-2020-04-13?mod=article_inline
T
Deep state describes dedicated, educated professionals.
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I had to do some research to understand the above political cartoon.
The Legislature’s Economic High Jump
The NC GOP brags on its budget surplus, which likely will fall well short of what the state will need to address the effects of the COVID-19
https://twitter.com/ColeToon/status/1249693005092700163
The "Berger" in the cartoon is Philip E. Berger, President pro tempore of the North Carolina Senate.
https://en.wikipedia.org/wiki/Philip_E._Berger
Not unexpectedly, Berger is a small time crook from a rural district, exactly the kind of guy you do NOT want to have control of a government budget.
www.newsobserver.com/news/politics-government/article240202657.html
The Joss Whedon script for Serenity, where Wash lives, is Serenity-190pages.pdf at www.mediafire.com/folder/1uwh75oa407q8/Firefly
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Why the long run might not bail out your stock portfolio after all
There’s good reason for Warren Buffett to be cautious about making new investments right now.
Because the investment world had gotten used to Buffett exuding supreme optimism about the U.S. economy’s long-term prospects, many were shocked to hear him express less than full-throated confidence about not only the stock market’s near-term but even the intermediate term.
Particularly telling was Buffett’s investment behavior at the March lows. In past crises he has been quick to snatch up shares (or entire companies) at deeply discounted prices. This time, in contrast, despite sitting on a huge pile of cash, he did nothing. “We have not done anything, because we don’t see anything that attractive to do,” Buffett told Berkshire shareholders.
My interpretation of Buffett’s lukewarm endorsement of the U.S. economy: Crises don’t always resolve themselves in a positive way. While they largely have in the past, at least as far as the U.S. stock market is concerned, there is no guarantee that they will do so in the future. Given that, the range of possible futures is wider than we think, and that range only expands as we focus further and further into the future.
If we’re being honest, the range of possible economic outcomes is huge — all the way from “happy days are here again” to a new Dark Ages.
Climate change provides a good example of what I have in mind. Regardless of your views about climate change, its impact over the next 12 months on the range of possible economic and stock market outcomes is negligible. But over the next 100 years, the range extends from no effect to apocalyptic.
Climate change is just one of the things that could have an increasing impact on the range of possible outcomes. Pandemics are another.
More at www.marketwatch.com/story/why-the-long-run-might-not-bail-out-your-sto
ck-portfolio-after-all-2020-05-05
The Joss Whedon script for Serenity, where Wash lives, is Serenity-190pages.pdf at www.mediafire.com/folder/1uwh75oa407q8/Firefly
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In other words...
Don't gamble with money you need.
Do Right, Be Right. :)
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Quote:You came to the wrong conclusion. The right conclusion is to take action against climate change and pandemics rather than hoard money, neglect an expensive problem, and hope the problem solves itself naturally without the government spending to solve it.
Originally posted by 6IXSTRINGJACK:
In other words...
Don't gamble with money you need.
Do Right, Be Right. :)
Quote:
Climate change provides a good example of what I have in mind. Regardless of your views about climate change, its impact over the next 12 months on the range of possible economic and stock market outcomes is negligible. But over the next 100 years, the range extends from no effect to apocalyptic. Climate change is just one of the things that could have an increasing impact on the range of possible stock market outcomes. Pandemics are another.
The Joss Whedon script for Serenity, where Wash lives, is Serenity-190pages.pdf at www.mediafire.com/folder/1uwh75oa407q8/Firefly
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Quote:
Originally posted by second:Quote:You came to the wrong conclusion. The right conclusion is to take action against climate change and pandemics rather than hoard money, neglect an expensive problem, and hope the problem solves itself naturally without the government spending to solve it.
Originally posted by 6IXSTRINGJACK:
In other words...
Don't gamble with money you need.
Do Right, Be Right. :)Quote:
Climate change provides a good example of what I have in mind. Regardless of your views about climate change, its impact over the next 12 months on the range of possible economic and stock market outcomes is negligible. But over the next 100 years, the range extends from no effect to apocalyptic. Climate change is just one of the things that could have an increasing impact on the range of possible stock market outcomes. Pandemics are another.
The Joss Whedon script for Serenity, where Wash lives, is Serenity-190pages.pdf at www.mediafire.com/folder/1uwh75oa407q8/Firefly
Then do something about it and don't ask people who don't have money.
I recycle. I don't have kids. I have a very small carbon footprint.
Outside of that, it's your problem, rich guy.
And until you want to talk about overpopulation being the main contributor to climate change, I have nothing to discuss with you on that topic because you're in denial.
Do Right, Be Right. :)
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Quote:6ix, you are thinking about this as a question of morals. Contrary to that, I see everything as engineering problems and this is a CO2 waste management problem. In my lifetime, Texas built enormously expensive sewage treatment plants to clean up Galveston Bay. Rather than dump their waste directly into the Houston Channel to make more money, the refineries were forced, practically at gunpoint by Democrats in the Texas Legislature, to clean up their liquid waste. The refineries said they would rather close than clean their waste. What a bunch idiots to say that, but they didn't close. They bitterly cleaned up, instead, complaining all the while about how expensive it was. The same needs to be done about gas wastes as was done about liquid waste. The same people who were opposed to cleaning up their liquids because they are so very poor and clean up costs so much money are the people opposed to cleaning up CO2 because it costs too much. Poor babies.
Originally posted by 6IXSTRINGJACK:
Then do something about it and don't ask people who don't have money.
I recycle. I don't have kids. I have a very small carbon footprint.
Outside of that, it's your problem, rich guy.
And until you want to talk about overpopulation being the main contributor to climate change, I have nothing to discuss with you on that topic because you're in denial.
Do Right, Be Right. :)
Those babies are people like you, 6ix, always pissing and moaning about there is no money and they can't afford to not dump their waste for free into the water and air. A bunch of lying, stupid, lazy cheapskates too ignorant to clean up their own messes. It took you years to finally clean up the trash you filled your house and garage with, 6ix. Now you live better for having done the work of handling your solid wastes. Your next project should be your gaseous wastes. You will live better once you do the work.
https://e360.yale.edu/features/negative-emissions-is-it-feasible-to-re
move-co2-from-the-air
The Joss Whedon script for Serenity, where Wash lives, is Serenity-190pages.pdf at www.mediafire.com/folder/1uwh75oa407q8/Firefly
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