This is the SPX earning yield after inflation: -2.3%. Investment of a life time 🤌
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@Theimmigrant84
Well given how markets are acting they clearly it’s the best investment ever. Absolute geniuses out there
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@sam91860232
@Theimmigrant84
What is the definition of this anyway? Earnings yield minus inflation?
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@sam91860232
@Theimmigrant84
right, because real earnings yield sounds to be like it should be Real 2021 Equity value/Real 2021 Earnings = the nominal values!
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@sam91860232
@Theimmigrant84
Both previous times market crashed or was about to crash (2000, 2008), not ATHs. After a crash it will again be a generational buying opportunity.
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@Theimmigrant84
Avoiding overvalued stocks is a more reasonable solution instead of shifting equity allocation towards cash/debt when facing high inflation & negative yields.
How "overvalued" is defined is critical; E/P is not the most reliable barometer in this market.
Most investors agree that equity valuations are stretched & this has implications in portfolio construction.
Investors shouldn't abandon equities altogether; they still offer positive real discount rates & hedge inflation. Instead, avoid allocation towards overvalued stocks.⬇️
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@Theimmigrant84
I looked at the formula - it is (100 / P/E ratio) - YoY inflation. This being historical low, doesn’t this mean it is time to sell rather than buy?
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