Do stock valuations matter anymore?

Historically, stock valuations have been an important predictive factor of future returns. A standard practice is to measure value by comparing stock prices to fundamental measures such as trailing earnings, projected earnings, dividends, and book value. I am increasingly questioning the usefulness of these measures however. While an enormous body of research has shown that … Continue reading Do stock valuations matter anymore?

Misleading statistics on the retirement crisis

The issue of retirement savings in the United States needs more sensible discussion and fewer sensationalist headlines such as The Retirement Crisis is Much Worse Than You Think and Fears of a Retirement Crisis are Overblown - and These Numbers Prove It. Unfortunately, discussions of this topic are rife with simplistic and misleading statistical arguments. … Continue reading Misleading statistics on the retirement crisis

Are stocks too expensive to be attractive?

The foundation of fundamental analysis is determining whether companies, sectors, and markets are expensive or cheap relative to measures of their inherent value. The most commonly-cited measure of value for stocks is the price-to-earnings (P/E) ratio. We might look at the most-recent year's earnings, the standard for P/E, or average earnings over a longer period … Continue reading Are stocks too expensive to be attractive?