Analysis of the 11 Select Sector SPDRs which represent the S&P 500 as a whole.
Analyzing the DJIA reveals the following insights:
Source Data via Yahoo! Finance. Accessed September 15, 2018.
Checking out 33 companies which will be reporting financial results this coming calendar week: September 24, 2018 through September 28, 2018.
Source: Yahoo Finance, Zacks Investment.
$APPL shares closed at $390/share on Friday, April 19, 2013.
The market capitalization is $367B.
Shares outstanding are: 939M.
Balance Sheet Cash: $137B.
Last year’s (September Fiscal Year End) earnings per share: $44.15/share.
This year’s estimated earnings per share: $43.58/share.
Current dividend yield = 2.7%
So, $AAPL is trading at (390/43.58) 8.9x forward earnings.
Ex-cash, $AAPL is trading at 5.6x forward earnings.
And, investor sentiment is low primarily due to increased competition and expectations that new products (e.g., slimmer iPad, next generation iPhone) won't be released until the Fall.
So, is $AAPL ripe for investment?
(Market capitalization – Cash) = ($367B-$137B) = $230B
(Earnings * Shares Outstanding) = ($43.58/share * 939M) = 5.6x
Analyzing the 64 rolling 20-year periods beginning with the period 1926 – 1945 and ending with the period 1987 - 2008 reveals the following re: the S&P 500 index return:
The best 20-year period was 1980 – 1999 in which the S&P 500 index annualized return was 17.88%.
The worst 20-year period was 1929 – 1948 in which the S&P 500 index annualized return was 3.1%.
The majority of the 64, 20-year time period returns fell in the range of 5% to 15%.
The market’s “return” volatility increases when shortening the time period under investigation. Analyzing rolling 5-year periods beginning with the period 1926 – 1930, reveals:
The best 5-year period was 1995 - 1999 in which the S&P 500 index annualized return was 28.56%.
The worst 5-year period was 1928 – 1932 in which the S&P 500 index annualized return was -12.47%.
The average annualized returns for the 5-year period time frames were between 5% and 15%.
Does this imply more tactical asset allocation to exploit the fluctuations? Or, is “buy-and-hold” a better strategy? With either approach, “volatility” or “variability” of returns needs to be put into a strategic context.
The CAPE stands for the Cyclically Adjusted PE Ratio.
It is based on average inflation-adjusted earnings from the previous 10 years.
It is also referred to as the Shiller PE Ratio, or PE 10.
Long-Term Descritive Statistics: (as of 3/7/2009):
Min: 4.78 (Dec 1920)
Max: 44.20 (Dec 1999)
The "Valuation Confidence Index" measures the percentage of investors (institutional and retail) who believe that the stock market is NOT overvalued.
Thoughts on portfolio re-balancing...
1. Active % threshold re-balancing in tax-deferred accounts (401k, IRA)...use a broker with a commission-free based ETF platform
2. Calendar-based re-balancing in taxable accounts
Excellent article re: "equal-weighted" indexing.