Equity Market Intelligence - Website

Traditional Valuation Metrics for the Largest US companies. Price to Earnings ratio ("PE"), Price to Earnings to Growth ratio ("PEG), Price to Sales Ratio ("PS"), Price to Book Value Ratio ("PB"), | Book Value of Equity = Total Assets- Total Liabilities Price to Free Cash Flow ratio ("PFCF") | FCF= Operating Cash Flow- CapEx).

PE ratio Regression vs Earnings Expected Growth rate for the largest market cap stocks in the SP500. It is widely known that higher valuation multiples can be justified by higher EPS expected growth rates. This is what is happening now in the market. For instance NVDIA has a PE ratio of 50x making it look expensive at first sight. However, if we take into account expected growth rate, that level of valuation can be justified. This is a trend we are seeing across many stock in today's market. In general Investors are willing to pay a higher PE compared to historical norms due to the fact that earnings growth can justify current price. But current market's optimism has the risk that if equities fail to materialize earnings expectations. For that reason investors must balance their growth optimism with the risk of potential overvaluation.

It is undeniable that 2024 is great year for the S&P 500 so far. 2024 ytd path is very similar to 2021 return path, the best performing year of S&P 500 for the last 24 years period. In the chart below we present daily compounding returns, for the S&P 500 since 2000.

https://lnkd.in/dkaXy-ve Mathematicians and Engineers use ordinary differential equations to model and describe the behaviour of dynamic phenomena. In quantitative finance we use Stochastic Differential Equations ("SDEs") because asset prices are to great extent random. The most important Stochastic Differential Equation is called Geometric Brownian Motion ("GBM") introduced by the Great Economist Paul Samuelson in 1965. GBM assumes that asset prices follow a log normal distribution and that asset returns are normally distributed (a not so realistic assumption due to fat tails observed). Read the article below...

S&P 500 - Valuation and Events The S&P 500 is currently trading at 5626, with a YTD return of 18.62%. The index remains in an uptrend in both the medium and long term, trading above key technical levels including the 50-day, 100-day, and 200-day simple moving averages (SMA). Valuation: Current P/E ratio is 20.9x above the 10-year average of 18.0x, indicating a slightly elevated market valuation compared to its historical norms. Key Economic Events This Week (September 17–19, 2024): Tuesday, Sep 17: 1) Core Retail Sales m/m: Expected 0.2% vs. previous 0.4%. 2) Retail Sales m/m: Expected -0.2% vs. previous 1.0%. Wednesday, Sep 18 (Fed Funds Rate) 1) According to CME FedWatch Tool, there is currently an equal implied probability of 50 or 25 bps rate cut. 2) FOMC Economic Projections, Statement, and Press Conference: Investors are closely watching for updates on inflation expectations, economic growth projections, and future rate guidance. Thursday, Sep 19: Unemployment Claims: Expected 230K vs. previous 232K.

do you know what DV01 is ? #finance #fixedincome

Are financial markets truly efficient, or can we identify patterns to forecast future movements? In this article, I present an analysis of the Efficient Market Hypothesis, the Random Walk Model, and the roles of Technical and Fundamental Analysis. Additionally, I discuss the valuation effect, including the impact of low P/E ratios and Shiller’s P/E ratio on long-run stock returns. Read the article below. https://lnkd.in/dnTdExQx

In this article, I demonstrate how to use the Price-to-Book value multiple effectively to conduct an initial screening for potentially undervalued stocks. https://lnkd.in/dr9FYfGV

https://lnkd.in/dzC8Z599