Value Investors Continue To Sniff Around

March 10, 2008 at 10:51 am  ·  Category: Sentiment Analysis

Some interesting pieces today on valuation:

The Wall Street Journal ran an article “Are Low P/E’s A Valid Reason To Buy Stocks?” (subscription required).  With the forward P/E on the S&P at 13.2 compared to a historical average of 16.5 going back to 1989, stocks look attractive.  But there are other considerations: declining earnings and inflation are the ones the article references.

Barron’s had a piece on Buffett “What Buffet’s Been Buying” (subscription required).  While publicly saying that stocks are neither expensive or cheap, Buffett has been nibbling a bit here and there.  The most interesting trade he’s made is selling long term puts (10-20 years) on the S&P and three foreign equity indexes.  That means he’s still bullish long term on the US and those three foreign exchanges.

The Capital Specator weighs in with a piece, “Any Bargains Yet?”, featuring two useful charts showing that trailing dividend yields are up and forward P/E ratios down.  Whether this is the bottom or not, stocks present better value now than they did a few months ago.

On this subject also see:

“A Number of Superb Value Funds Have Recently Reopened”, Top Gun FP, Tuesday March 4, 2008

“Some Investors Start To See Value”, Top Gun FP, January 20, 2008

Posted by Greg Feirman  ·  Trackback URL  ·  Link