S&P 500 Intrinsic Value Index Updatevalueplays
There really isn’t any fundamental reason for this sell off. Based on economic data the economy is strong and continuing to grow. The market was high, but nowhere near as high as the last two “bubbles” when stocks were over >100% higher than the S&P Intrinsic Value Index. Recently at their peak they were ~25% over the index’s value.
The SP500 has fallen to only 7% premium to Value Investor Index today. While the Value Investor Index is not useful in identifying market tops, it is very useful when it comes to market lows. The SP500 at $2,440 at decent valuations relative to long-term earnings, current inflation and long-term Real Private GDP growth.
As an indicator, the Value Investor Index does not act as an on/off switch for investors but is exceptional at identifying levels when investors have high pessimism that is not justified by economic conditions.
The Insider Buying is strongest in 3yrs-stronger than 2016 SP500 lows-Good Value Investor signal-see the BLUE vsRED levels. This has always been a good economic signal as well as the basis of insider activity is a multi-year perspective of future business commitments. One should always seek a blend of internally consistent economic data when using any indicators. We have such today. Note the CAB vs Job Openings and 2016 area highlighted as ‘Industrial Recession’ for comparison