Of Special Interest ...examining a significantly timely topic
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.
Dow Jones 9000…..By 2007?
Sound like a tall order? This is what the DJIA must achieve to match the total return from a 20-year zero T-bond over the next 20 years.
Monitoring Earnings Trends
Last year, two original earnings momentum evaluators were introduced in this publication. Currently both are giving off constructive readings for 1987 and perhaps beyond. Unfortunately, history seems to indicate this is not necessarily a big positive for stock prices.
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.
The Historical Stock Market Impact of Corporate Tax Rate Changes
Historically, have tax cuts been a stock market positive? Have tax increases been a negative? What impact do changes in the tax rate have on prevailing market P/E multiples? The answers to these questions may surprise some of our readers.
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.
A Hard Look: Growth Versus Cyclical
In October, the market flip flopped with big growth stocks leading and cyclicals and basics mostly lagging. We continue to think underlying market leadership is “growth,” but we are no longer so sure. We have taken a hard look at the “cyclical” argument, including two of our own proprietary earnings momentum tools. From an earnings standpoint, 1987 might be a better earnings year than most expect.
Gold Continues to Run
Something strange is occurring in the gold market and it is not related to inflation. We have been discussing this for the last two months and here is an update for those interested. I continue to believe most portfolios should own some gold.
Focus on Gold
Something strange is occurring in the gold market and it is not related to inflation. We touched on this a month ago, but this time we have added some thoughts. I continue to believe most portfolios should own some gold.
“Ring Them Bells”
We are establishing the regional Bell companies as a formal equity portfolio sector, initially investing in BellSouth, NYNEX and U.S. West in this issue. We think these companies look like an attractive defensive equity haven these days.
Statistics for Your Files
A number of clients have requested historical data regarding earnings, dividends and book values for the stock market indices. This section provides information, going as far back as 1910.
More Historical Perspective Featuring Book Value Ratios
Book value has its faults as an analytical tool with individual stocks, but it seems to be quite valid in the aggregate as a stock market value gauge. This most recent addition to our value benchmark series presents quarterly book value ratios for the S&P 400 on a quarterly basis, 1929 to date.
Is 1986 Going to Be Another 1962?
The current 1974-1986 secular bull market period is similar to the 1949-1962 period (not 1921-29) in a number of ways. In this study, we compare earnings and dividend trends, as well as price action. If the 1949-1962 script is playing over again, the P/E expansion may be about over, with a non-economic bear market due.
A Hot Group: Furniture
The furniture stocks have been hot recently, but we have a hunch you ain’t seen nothin’ yet. There are going to be a lot of upside earnings surprises over the next twelve months.
Oil: Today and Yesterday and Tomorrow
From a precise timing standpoint, it may still be premature to bottom guess the oils, but it probably is time for big portfolios to start accumulating. The recent waterfall decline in oil prices is nothing new. A number of similar declines have taken place over U.S. economic history. The future? Very long-term, oil is not a very attractive industry.
Perception for the Professional
March 2026 Issue
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March 2026 Issue
