Valuation {05.21.14}

This weekend will kick off the summer season with the Memorial Day long weekend.  This means in Wall Street's world that things slow down a bit as the big guys head to their favorite weekend watering holes on Friday.  In essence the investment community works on a three and a half day work week as Monday mornings tends to be slow and Fridays often finds the "B" team manning the desks, especially after the lunch hour. 

Since we're on the verge of that traditional slow down, I thought I'd take a look again at where we stand on a valuation basis.  As of this writing the market as represented by the S&P 500 is up less than 2% for the year.  Not much has changed in these numbers although valuations are a bit higher now than they were back in April.

Our Midpoint Estimate $118.75 {Through 12.31.2014}

Current PE:                   15.79

Earnings Yield:               6.33%

Dividend Yield:              1.86%

Rolling Four Quarter Estimate  $123.08 {Through 05.16.2014 via Fundamentalis.com}

Current PE:                   15.23

Earnings Yield:               6.56%

Dividend Yield:              1.86%

Current Expected Price Cone of Probability,   05.15.2014:   1,700-2,100.

The current yield on the 10 year US Treasury is 2.62%.  

The Cone of Probability is our current assessment of the trading range within which we think stocks have the potential to trade during the described time period.  It is a probabilistic assessment based on a many factors.  Some of these inputs are: Earnings estimates, also are those estimates rising or falling, dividend yield, earnings yield and the current yield on the US 10 year treasury.  This is not an exhaustive list of all of the variables that are used in creating the cone.  The Cone of Probability is used solely for analytical purposes.  It will fluctuate with market conditions and changes to the data inputs.  Index prices can and have traded outside of the range of the cone.  The data supplied when we discuss the cone is for informational use only.  There should be no expectation that this price range will be accurate and there are no guarantees that this information is correct.

*Long ETFs related to the S&P 500 in client accounts, although positions can change at any time.