Goldman: Misleading Accounting Makes Free Cash Flow Yield Irrelevant

The S&P 500 may look expensive on most traditional valuation metrics, however, according to Goldman Sachs due to a record low level of capital spending; the index appears attractive when valued on free cash flow yield. Indeed, according to a recent research report from the investment bank, capital expenditure as a percentage of cash flow from operations ranks in just the fifth historical percentile since 1990. These Behavioral Biases Are Driving Investor Decisions Switching Costs: The More the Better More Mutual Funds Launched This Year Than ETFs The report goes on to argue that valuing companies according to free cash flow…