Do Bond Yields Imply The S&P 500 is Undervalued?
Episode description
Recently there have been many discussions on the valuation of the S&P 500 based on forward earnings multiples. But what role do bond yields have in that evaluation? Does the implied P/E ratio of the Baa bond yield or US 10 Year Treasury yield imply that stocks have more room to run? In any case, why not just buy but hedge as a strategy?
S&P 500 Index earnings yield
Inverse of P/E ratio is the E/P earnings yield.
Baa bond yield to calculate the implied P/E ratio
Baa bond yields vs US 10 Year Treasury yields to compare to stock earnings yield
How to calculate the earnings yield on stocks
How to calculate the implied PE ratio from bond yields
Forward PE ratio calculation
Earnings estimates vs reality.
How earnings estimates and earnings can change
Bond yields vs Earnings Yields
Mentioned in this Episode:
Book Buy and Hedge https://amzn.to/3bq8FYM
Derek Moore’s book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547
Razor Wealth Management www.razorwealth.com
Baa Corporate Bond Yields https://fred.stlouisfed.org/series/BAA
JP Morgan Guide to the Markets https://am.jpmorgan.com/us/en/asset-management/protected/adv/insights/market-insights/guide-to-the-markets/
Podcast on Hedged Equity Strategies https://podcasts.apple.com/us/podcast/why-investors-need-a-protective-hedged-equity-strategy/id1432836154?i=1000418366567