Liquidity Factor Investing

S&P Intrinsic Value Update

“Davidson” submits:

Q4 hedge fund letters, conference, scoops etc

Liquidity Factor Investing

rawpixel / Pixabay

The Dallas Fed inflation measure, 12mo Trimmed Mean PCE, was reported at 1.84%. This is a drop of ~0.2% from recent levels of 2.02% Inflation remains controlled.

S&P Intrinsic Value

The SP500 Value Investor Index(VII) for April is $2357. The SP500 priced at $2825 represents a 19.4% premium. Should inflation continue to ebb from current levels, the VII will justify higher equity prices, i.e. lower inflation makes SP500 EPS more valuable.

S&P Intrinsic Value

The VII has its greatest value in identifying good equity buying levels. Dec 2018’s SP500 decline reduced the premium to 3% and was a good buying opportunity. Past market peaks represented 100%-50% SP500 premium to the VII. While the VII is not used to identify market tops, the SP500 ~20% premium present today is not overly speculative. Before this investment cycle peaks, the expectation is that the SP500 is likely to price more than 50% premium to this index. The VII represents US growth fundamentals since 1939 and sports a 6%+ year over uptrend. Should tariff and home mtg initiatives currently in process prove successful, in 4yrs-5yrs the SP500 has the potential to price in the $4,000-$5,000 range with a 50% premium to the VII. A more speculative market could see higher prices.

Saved Articles

The Life and Career of Charlie Munger

Charlie is more than just Warren Buffett’s friend and Berkshire Hathaway’s Vice Chairman – Buffett has actually credited him with redefining how he looks at investing. Now you can learn from Charlie firsthand via this incredible ebook and over a dozen other famous investor studies by signing up below:

  • Learn from the best and forever change your investing perspective
  • One incredible tidbit of knowledge after another in the page-turning masterpiece of a book
  • Discover the secrets to Charlie’s success and how to apply it to your investing
Never Miss A Story!
Subscribe to ValueWalk Newsletter. We respect your privacy.

Are you an intelligent investor?

ValueWalkPremium is a website and newsletter for smart investors like yourself. We focus on the latest hedge fund industry news much of which is not in the public domain and obtained via our sources.

We also have 10 years of resources on how to use this information to better your investment process.

Sign up for  today for only a few dollars a day and get a 3 day no obligation trial with a targeted 20% discount coupon code.

Cancel anytime during trial and you are never charged.

Limited time offer: For first 50 subscribers