How overvalued is the market right now? Depends on the metrics you use – here are the ones Z Option Trader uses:
| Z Hedge Market Valuations: | Current | Mean | Delta | Over % |
| Shiller’s 10 Year PE Ratio: | 26.5 | 16.04 | 10.46 | 65.21% |
| Trailing 12 Month PE Ratio: | 24.61 | 14.63 | 9.98 | 68.22% |
| Tobin’s Q Ratio: | 0.98 | 0.68 | 0.3 | 44.12% |
| Market Cap to GDP: | 120.9 | 90.00 | 30.9 | 34.33% |
| Morningstar’s Fair Value: | 1 | 0.90 | 0.105 | 11.73% |
| Price to Sales: | 1.89 | 1.43 | 0.46 | 32.17% |
| Average: | 42.63% |
If you are 100% invested in stock right now – think you need to ask yourself, can I handle a 40% reversion to the mean?
Great Jeffrey Gundlach interview in Barron’s – highly recommended reading:
- Barron’s – Jeffrey Gundlach on Stocks, Trump, and Gold
After last week’s incredible melt up – only one stock is left on my watch list screen:
| Ticker | Price | Fair Value | Margin of Safety | Yield % |
| AMGN | $161.10 | $194.00 | $32.90 | 2.2% |
Click on the links to research further.
Results are based on the following screen:
- Low fair value uncertainty.
- Wide moat.
- Morningstar rating 4 or more stars.
- Financial Health Grade >= B.
- Current P/E <= 20.
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