S&P 500 Intrinsic Value Index Update

27SepSeptember 27, 2019

S&P 500 Intrinsic Value Index Update

“Davidson” submits:

Q2 hedge fund letters, conference, scoops etc

It is useful to note that the Value Investor Index does not adjust w/rates. It is based on long-term SP500 EPS and the Natural Rate(based on long-term economic fundamentals). The Natural Rate is based on the long-term Real Private GDP trend and a 12mo inflation measure. Many are using the 10yr Treas rate as a capitalization rate which comes from Greenspan’s Fed Model of years ago, but this would have the SP500 priced closer to ~$7,000 -$10,000 with rates 1.65% and a higher level of current earnings as opposed to the 4.94% of the Natural Rate using the historical long-term SP500 EPS median. The basis of the Value Investor Index is that it takes market psychology which has driven 10yr rates towards record lows out of the calculation.

Author

valueplays

Todd Sullivan is a Massachusetts-based value investor and a General Partner in Rand Strategic Partners. He looks for investments he believes are selling for a discount to their intrinsic value given their current situation and future prospects. He holds them until that value is realized or the fundamentals change in a way that no longer support his thesis. His blog features his various ideas and commentary and he updates readers on their progress in a timely fashion. His commentary has been seen in the online versions of the Wall St. Journal, New York Times, CNN Money, Business Week, Crain’s NY, Kiplingers and other publications. He has also appeared on Fox Business News & Fox News and is a RealMoney.com contributor. His commentary on Starbucks during 2008 was recently quoted by its Founder Howard Schultz in his recent book “Onward”. In 2011 he was asked to present an investment idea at Bill Ackman’s “Harbor Investment Conference”.