Category Archives: S&P500

17/9/20: Stonks are Getting Balmier than in the Dot.Com Heat

Via Liz Ann Sonders @LizAnnSonders of Charles Schwab & Co., Inc. a neat chart summarizing the madness of the King Market these days:


Yeah, right: PE ratio is heading for dot.com madness levels, PEG ratio (price earnings to growth ratio or growth-adjusted PE ratio) is now vastly above the dot.com era peak, and EPS is closer to the Global Financial Crisis era lows. 

What can possibly go wrong, Robinhooders, when a mafia don gifts you some chips to wager at his casino?


24/7/20: Bonds v Stocks: Of Yields, Investors and Large Predators


Corporates are reeling from the COVID19 pandemic impacts, yet stocks are severely overpriced by all possible corporate finance metrics. Until, that is, one looks at bonds.


Over the 3 months through June 2020, average 10 year U.S. Treasury yield has been 0.69 percent. Over the same period, average S&P500 dividend yield was 2.02 percent. The gap between the two is 1.33 percentage points, which (with exception of March-May average gap of 1.42 points) is the highest in history of the series (from 1962 on).

Given that today's Treasuries are carrying higher liquidity risk (declining demand outside the official / Fed demand channel) and higher roll-over risks (opportunity cost of buying Ts today compared to the future), the real (relative) bubble in financial markets todays is in fixed income. Of course, in absolute returns terms, long-term investment in either bonds or equities today is equivalent to a choice of being maimed by a T-Rex or being mangled by a grizzly. Take your pick.

21/7/20: Stonks and Stinks: S&P500 Net Profit Margins


Stonks reporting season is rolling on. And so far, things are predictably gloomy:


Yeeks! But wait, by sector:

  • Seven out of eight sectors are reporting lower net profit margins than 5 year average, with Utilities being the only sector reporting above average margins;
  • Nine out of nine sectors reported so far have lower net profit margins than in 2Q 2019.
Per Factset: "For the second quarter, the S&P 500 is reporting a year-over-year decline in earnings of -44.0% and a year-over-year decline in revenues of -10.5%."

Double yeeeks!

Meanwhile, what's S&P and stonks are doing? 1 month chart:


and 3 months

Because happiness is just around the corner for all.