Intrinsic Value
Value Benchmarks
The stock market is no longer radically overvalued. The current readings on these benchmarks approximate the readings at some past cyclical bear market lows. History tells us that new cyclical bull markets do not always have to come from grossly undervalued levels.
A “New Era” Version of the Major Trend Index?
Our published Major Trend Index has been registering negative readings since spring. But what happens if we remove the Intrinsic Value measures from the Index?
Intrinsic Value Benchmarks
Almost any way you cut it, the U.S. stock market is historically very overvalued. Only by comparisons with Japan and perhaps Singapore, can U.S. stocks be viewed as relatively attractive.
Intrinsic Value Benchmarks
We were not planning to publish the Leuthold Group’s Histographs this issue. But clearly a number of clients have a high level of interest in this work. We had a large number of calls this last month requesting updates. So, here they are again.
Focus: Intrinsic Value Benchmarks
Updated histographs of P/E multiples, book value ratios and yields are presented this issue, as well as a new histograph of cash flow ratios.
Benchmarks……Intrinsic Value
It has been only two months since we last published our “Histographs” covering stock market P/E’s, dividend yields and book value ratios. But, 1987 estimates are now included and of course, the stock market has made a big move. It is time for an update.
Benchmarks......Intrinsic Value
Today’s normalized P/E multiple is close to the high quartile, with dividend yields in the low decile and book value ratios close to their high decile. The cash flow ratio is about at its historical median, but other benchmarks demonstrate the stock market’s potential downside vulnerability.
Client Questions
Here again are some of the client queries we have had over the last month or so.
Intrinsic Value Perspective
The stock market, at least according to the most popular market indices, has rebounded to its former 1986 peak levels. Updated histographs are included herein, providing perspective in terms of P/E’s, Dividend Yields, and Book Value ratios for the S&P 400.
A Demonstration: Stock Market Potential By P/E Level
Over the past 57 years, what kind of future performance did the investor experience when the market was at 10 times earnings? 15 times earnings? 20 times earnings? Based on this work, over the next five years total stock market returns should not be expected to exceed 6% per year.
Intrinsic Value Comparisons
How does the market stand today in terms of historical ranges? Overall, it is above the historical medians for these intrinsic value measures, but not yet extremely overvalued. Clearly though, for the first time in twelve years, the stock market is no longer cheap.
Perception for the Professional
March 2026 Issue
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March 2026 Issue
