Market valuations – Page 3

How low could the FTSE 100 go?

The FTSE 100 seems to be entering crash mode as it plummets towards 6,000. In just the last month it’s lost over 10% of its value with no sign of a slowdown. Panicked investors everywhere are looking for an exit.

FTSE 100 Valuation and Projection: September 2014

Once again the FTSE 100 has come eye-wateringly close to a new all-time high. By now this shouldn’t be big news because it’s been happening for almost all of 2014.

So what does it all mean? Is the FTSE 100 cheap, expensive, about to begin a massive bull run like the S&P 500 or enter a new bear market like it did in 2000 and 2007?

S&P 500 CAPE Valuation and Projection: August 2014

The S&P 500 is currently experiencing a huge bull market, but it’s now clearly expensive on long-term valuation metrics like Robert Shiller’s CAPE. When I last looked the S&P 500 was up to 1,980, and at that level, it has a CAPE ratio of 26.

FTSE 100 CAPE valuation and projection for June 2014

As part of my investment process each month I review the FTSE 100 using CAPE (Cyclically Adjusted PE) in order to project a ‘best guess’ of future returns for the UK market over the next few years.

Stock market valuation mean reversion is a powerful force

Stock market valuation mean reversion, or less technically, the tendency of stock market valuation ratios to stay relatively close to their long-term average, which is one of the most important concepts in my investment framework.

FTSE 100: Expensive, cheap or fair value?

I’ve written a lot recently about the FTSE 100, whether it’s expensive or cheap and different ways of visualising the range of values it could reasonably reach; so when a friend of a reader suggested that my valuation “bands” were too wide, I decided to review my approach.