Despite the recent S&P 500 rally, stocks are still cheap relative to bonds, that’s the key takeaway from a research note out today from Bank of America Merrill Lynch, which looks at the Fed Model of equity valuation. In Year of “Improbable” Events, Stock Rally Is A Valuation Fairy Tale The Fed Model is based on the comparison of the earnings yield on stocks with bond yields. It’s a simple strategy the many investors tend to overlook in favour of more complex valuation methods. Bulls argue that the spread between bond yields and the earnings yield will normalise as equity…
Stocks Are Cheap…Compared to Bonds
Sign up now and get our in-depth FREE e-books on famous investors like Klarman, Dalio, Schloss, Munger Rupert is a committed value investor and regularly writes and invests following the principles set out by Benjamin Graham. He is the editor and co-owner of Hidden Value Stocks, a quarterly investment newsletter aimed at institutional investors. Rupert owns shares in Berkshire Hathaway. Rupert holds qualifications from the Chartered Institute For Securities & Investment and the CFA Society of the UK. Rupert covers everything value investing for ValueWalk