More Trading Tips

By: Charles Meek | Wed, Jan 18, 2006
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Dow Jones Industrial Average   10,960
Value Line Arithmetic Index   1,994
30-Year Treasury Yield (TYX)   4.53%
20+ Year Treasury Bond Price (TLT)   92.03
Gold 1/10 Ounce (GLD)   $55.44

The Big Picture for Stocks
The 4-year cycle is negative into 2006.

Technical Trendicator (1-4 month trend):
Stock Prices   Down
Bond Prices   Down
Gold Price   Up

More Trading Tips

Market Valuation

The bullish case for stocks at present seems based largely on price-earnings ratios being modest. However, Charles de Vaulx in a December 12, 2005 Barron's interview points out that there are factors which suggest that p/e ratios are higher than most people think. These factors include stock options not being expensed and pension liabilities being overstated.

De Vaulx argues that pension plans often use a rate-of-return assumption of around 8 ½%. But since the typical pension plan is invested 60% in equities and 40% in bonds, "an assumption of 8 1/2 % is criminal."

He thinks that instead of 15 or 16 times earnings, the S&P multiple - correctly accounted for - is around 20. Further, we may be at peak earnings for this cycle.

De Vaulx also points out that there has been massively more insider selling than buying. His calculation of insider activity from the weekly Barron's insider column shows insider sellers over buyers by a factor of 20-to-1 over the last 12 months.


Charles Meek

Author: Charles Meek

Charles Meek

Mr. Meek is a Registered Investment Advisor and editor of

MeekMarketModels does not guarantee the accuracy or completeness of this report, nor do they assume any liability for any loss that may result from reliance by any person upon any such information or opinions. Such information and opinions are subject to change without notice and are for general information only. In making any investment decision, you will rely on your own review and examination of the facts and the records relating to such investments. Trading the market is extremely risky. Our suggestions are often very speculative and not suitable for many investors. Past results are not indicative of future returns. Meek Market Models, Inc.

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