Stock Prices are Out of This World
Valuations Are at the Furthest Edge of the Financial Solar System By Robert Prechter, excerpted from the January 2025 Elliott Wave Theorist. Figure 1 updates our history of year-end valuations for stocks of S&P companies on two bases: price to book value (Y axis) and dividend yield (X axis). I thought the year-end 2021 overvaluation would never be surpassed. But as you can see, the year-end 2024 reading is both higher and further to the right. It is the highest multiple ever recorded for S&P Industrials’ price to book value and the fifth-lowest level for the S&P Composite’s dividend yield, the four lower readings all occurring in 1998-2001. We have long called this our Pluto chart. Perhaps we should have expected another extreme valuation near that of 2021. After all, Pluto was discovered to be a planet pair. The extreme readings of 1998-2001 stayed within the dashed-line channel, but the past six years’ closing valuations are all beyond it. In three of those … [Read More...]
Invest Like Warren Buffet
Warren Buffett now owns more T-bills than the Federal Reserve.
It’s true: Buffett’s investment firm, Berkshire Hathaway, owns $235 billion worth of T-bills; the Fed owns $195 billion worth. Of course, most of the Fed’s money is in other government-guaranteed debt. Buffett’s is mostly in stocks. Still, his current cash holdings are about twice the average for the previous five years. How did he accumulate so much cash? By selling stocks in this heady environment.
Gold Prices: The calm before a record run
Gold’s three-month implied volatility has declined to its lowest level in over four years. While low volatility is not a short term timing tool, low volatility eventually precedes high volatility. At the same time, total open interest in gold futures has declined to its lowest level since December 2018, as traders are either closing futures contracts or abstaining from opening new ones. The low level of open interest means that investors’ attention is turning away from gold, and the low implied volatility indicates that investors do not expect gold to move much over the course of the next three months. Both are preludes to what we see as a major move forming in gold prices.
This Trend Will Likely Soon Rock the U.S. Financial System
Nearly everyone who buys groceries, fills their car tank with gas, pays rent, buys car insurance and so on is talking about the high cost of living. And it’s true that consumer price inflation is higher today than before the pandemic – although, it’s nowhere near as high as it was two years ago, when the annual inflation rate spiked to a 40-year peak of 9.1%.
Why You Should Pay Attention to This Time-Tested Indicator Now
"How High Can Markets Go?" -- asks this magazine cover By Elliott Wave International Paul Montgomery's Magazine Cover Indicator postulates that by the time a financial asset makes it to the cover of a well-known news weekly, the existing trend has … [Read More...]
Gold: Setting Near-Term Price Targets
Our "initial upside target" -- has now been exceeded. What's next? By Elliott Wave International Around the first week of the year, the outlook for gold was not looking promising, at least according to this Jan. 5 headline (Reuters): Gold set for … [Read More...]
Free report: ‘Gold Investors’ Survival Guide’
Dear reader, Gold prices are breaking records -- and you want to know what's next. So, our friends at Elliott Wave International have created a practical (and free) guide to help you get on the right track fast. In "Gold Investors' Survival … [Read More...]
U.S. Real Estate: A 24% Problem
When houses are bought and sold as shelter, prices tend to be relatively stable. Yet, when houses are treated like speculative items, booms and busts become much more likely. ~ Tim McMahon, editor U.S. Real Estate: A 24% Problem "...24% of U.S. … [Read More...]
