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