Current market valuations

Equity markets, on average, go through periods of high and low valuations that can last for years. Although it is not impossible to find undervalued stocks during times of higher valuations, it is easier to find bargains during times of lower valuations. So, how do you tell when the market is over or undervalued?

The two methodologies below are the ones that I take seriously and consider from time to time. Each one offers a very-brief explanation as to why I they work. The link in the 'Total Market Cap to GNP' contains an essay written by Warren Buffet that may be helpful in understanding market cycles and historical periods of under- and over-valuation.

Shiller PE Ratio

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Economist Robert Shiller has developed a unique variation of the P/E ratio that uses the inflation-adjusted average from the previous 10 years earnings of the S&P 500 to calculate P/E ratios. What this does, according to Shiller, is smooth out the ". . . frequent boosts and declines that we see due to the business cycle" (Irrational Exuberance, 2000, p. 7).

In addition to the unique calculation methodology, it's also a fascinating set of market data that spans stock-market history from 1871 to present including two world wars, the bubble of the 1920s, the Great Depression, etc. The data set (if taken dirctly from Shiller's site) also includes columns for the consumer price index and 10-year interest rates.

Now that you know what it is and the theory behind it, this unique variation for calculating P/E ratios can be studied by either:

  • Navigating to Shiller's Online Data page and download it in Excel format. (See top link in second paragraph.)
  • Directly downloading Shiller's Excel sheet.
  • Using a third-party site. Both were both kept current at the time of this writing:

Total Market Cap to GNP (or GDP)

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In an essay published for Fortune Magazine in December of 2001, Warren buffet wrote the following:

"[A]ll publicly traded securities as a percentage of the country's business--that is, as a percentage of GNP... has certain limitations in telling you what you need to know. Still, it is probably the best single measure of where valuations stand at any given moment."
He then went on to say:
For me, the message of that chart is this: If the percentage relationship falls to the 70% or 80% area, buying stocks is likely to work very well for you. If the ratio approaches 200%--as it did in 1999 and a part of 2000--you are playing with fire.
With that, many sources now refer to the 'Total Market Cap to GNP (or GDP) ratio', 'Buffett Indicator', 'The Buffet Metric' or a similar naming variation when considering overall market valuations. Since it is easier to punt on this one, I will refer you to the following resource, a historical graph of GDP vs. Total Market Cap:
Market Capitalization to GDP

Current market valuations ::: is characteristic of:


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A list of stocks that passed a scan or caught my attention for some reason.
AAON, Inc.AAONg, yks
ABM Industries, Inc.ABMg, yks
Abbott LaboratoriesABTg, yks
Archer Daniels Midland CompanyADMg, yks
Autodesk, Inc.ADSKg, yks
American Eagle OutfittersAEOg, yks
American Financial GroupAFGg, yks
AFLAC IncorporatedAFLg, yks
American International Group IncAIGg, yks
Applied Industrial TechnologiesAITg, yks
The Allstate CorporationALLg, yks
Analogic CorporationALOGg, yks
AMETEK, Inc.AMEg, yks
Amgen, Inc.AMGNg, yks
AMN Healthcare Services, Inc.AMNg, yks
American Woodmark CorporationAMWDg, yks
AutoNation, Inc.ANg, yks
Anadarko Petroleum CorporationAPCg, yks
Amphenol CorporationAPHg, yks
Apollo Education Group IncAPOLg, yks
Airgas, Inc.ARGg, yks
On Assignment, Inc.ASGNg, yks
Astec Industries, Inc.ASTEg, yks
AptarGroup, Inc.ATRg, yks
Atrion CorporationATRIg, yks
American Express CompanyAXPg, yks
AZZ IncorporatedAZZg, yks
BancFirst CorporationBANFg, yks
Bed Bath & Beyond Inc.BBBYg, yks
Best Buy Co., Inc.BBYg, yks
C.R. Bard, Inc.BCRg, yks
Becton, Dickinson and Co.BDXg, yks
Franklin Resources, Inc.BENg, yks
Bio-Rad Laboratories, Inc.BIOg, yks
The Buckle, Inc.BKEg, yks
Brady CorpBRCg, yks
Berkshire HathawayBRK.Ag, yksYes, imo
Blyth, Inc.BTHg, yks
Anheuser Busch Inbev SA (ADR)BUDg, yks
Buffalo Wild WingsBWLDg, yks
CACI International IncCACIg, yks
The Cheesecake Factory IncorporatedCAKEg, yks
Cameron International CorporationCAMg, yks
Casey's General Stores, Inc.CASYg, yks
The Chubb CorporationCBg, yks
Commerce Bancshares, Inc.CBSHg, yks
Cabot Microelectronics CorporationCCMPg, yks
Cullen/Frost Bankers, Inc.CFRg, yks
Church & Dwight Co., Inc.CHDg, yks
C.H. Robinson Worldwide, IncCHRWg, yks
Cincinnati Financial CorporationCINFg, yks
Colgate-Palmolive CompanyCLg, yks
Capital One Financial Corp.COFg, yks
Columbia Sportswear CompanyCOLMg, yks
Costco Wholesale CorporationCOSTg, yks
Copart, Inc.CPRTg, yks
America's Car-Mart, Inc.CRMTg, yks
CARBO Ceramics Inc.CRRg, yks
Cisco Systems, Inc.CSCOg, yks
Cash America International IncCSHg, yks
Carlisle Companies, Inc.CSLg, yks
Cintas CorporationCTASg, yks
CenturyLink, Inc.CTLg, yks
Cognizant Technolgy Solutions Inc.CTSHg, yks
Citrix Systems, Inc.CTXSg, yks
Cubic CorporationCUBg, yks
Covance Inc.CVDg, yks
Calavo Growers, Inc.CVGWg, yks
CVS Caremark CorporationCVSg, yks
Chevron CorporationCVXg, yks
Donaldson Company, Inc.DCIg, yks
Dell Inc.DELLg, yks
Dollar General Corp.DGg, yks
Quest Diagnostics IncDGXg, yks
Danaher CorporationDHRg, yks
Dollar Tree, Inc.DLTRg, yks
Dorman Products Inc.DORMg, yks
Dover CorpDOVg, yks
DPL Inc.DPLg, yks
Dril-Quip, Inc.DRQg, yks
DST Systems, Inc.DSTg, yks
Duke Energy CorpDUKg, yks
DeVry Education Group IncDVg, yks
DaVita HealthCare Partners IncDVAg, yks
Brinker International, Inc.EATg, yks
Ecolab Inc.ECLg, yks
Equifax Inc.EFXg, yks
Energen CorporationEGNg, yks
Callaway Golf CoELYg, yks
EMC CorporationEMCg, yks
Endo Health Solutions Inc.ENDPg, yks
Energizer Holdings, Inc.ENRg, yks
Express Scripts Holding CompanyESRXg, yks
Ethan Allen Interiors Inc.ETHg, yks
Edwards Lifesciences CorpEWg, yks
Expeditors International of WashingtonEXPDg, yks
Exponent, Inc.EXPOg, yks
Fastenal CompanyFASTg, yks
First Cash Financial Services, Inc.FCFSg, yks
FDC Limited (Parent)FDCg, yks
Family Dollar Stores, Inc.FDOg, yks
FactSet Research Systems Inc.FDSg, yks
FedEx CorporationFDXg, yks
First Financial Bankshares IncFFINg, yks
Fluor CorporationFLRg, yks
FMC CorpFMCg, yks
Fossil Group IncFOSLg, yks
Forest Laboratories, Inc.FRXg, yks
Gannett Co., Inc.GCIg, yks
Genesco Inc.GCOg, yks
General Dynamics CorporationGDg, yks
Gold World Resources IncGDWg, yks
General Electric CompanyGEg, yks
Guess?, Inc.GESg, yks
Greenhill & Co., Inc.GHLg, yks
Gildan Activewear Inc (USA)GILg, yks
Gilead Sciences, Inc.GILDg, yks
Great Northern Iron Ore PropertiesGNIg, yks
Gentex CorporationGNTXg, yks
Gen-Probe IncorporatedGPROg, yks
The Gap Inc.GPSg, yks
The Gorman-Rupp CompanyGRCg, yks
The Goldman Sachs Group, Inc.GSg, yks
Great Southern Bancorp, Inc.GSBCg, yks
W.W. Grainger, Inc.GWWg, yks
Haemonetics CorporationHAEg, yks
Hasbro, Inc.HASg, yks
HCA Holdings IncHCAg, yks
The Home Depot, Inc.HDg, yks
Heico CorpHEIg, yks
Helen of Troy LimitedHELEg, yks
Health Management Associates IncHMAg, yks
Hochschild Mining PlcHOCg, yks
Harley-Davidson IncHOGg, yks
Helmerich & Payne, Inc.HPg, yks
H & R Block IncHRBg, yks
Hormel Foods CorpHRLg, yks
Harris CorporationHRSg, yks
Henry Schein, Inc.HSICg, yks
Hershey CoHSYg, yks
Heartland Express, Inc.HTLDg, yks
Heartland Financial USA IncHTLFg, yks
Humana IncHUMg, yks
Hawkins, Inc.HWKNg, yks
International Business Machines Corp.IBMg, yks
ICU Medical, IncorporatedICUg, yks
IDEXX Laboratories, Inc.IDXXg, yks
IDEX CorporationIEXg, yks
International Game TechnologyIGTg, yks
II-VI, Inc.IIVIg, yks
Imperial Oil Limited (USA)IMOg, yks
Intel CorporationINTCg, yks
Investment Technology GroupITGg, yks
Johnson Controls IncJCIg, yks
Jacobs Engineering Group IncJECg, yks
J&J Snack Foods Corp.JJSFg, yks
Johnson & JohnsonJNJg, yks
The Jones Group Inc.JNYg, yks
Jos. A. Bank Clothiers IncJOSBg, yks
Joy Global Inc.JOYg, yks
JPMorgan Chase & Co.JPMg, yks
Kirby CorporationKEXg, yks
The Coca-Cola CompanyKOg, yks
Kohl's CorporationKSSg, yks
K Swiss IncKSWSg, yks
Lancaster Colony Corp.LANCg, yks
Landauer IncLDRg, yks
Lee Enterprises, IncorporatedLEEg, yks
Littelfuse, Inc.LFUSg, yks
Laboratory Corp. of America HoldingsLHg, yks
Liberty Media CorpLMCAg, yks
Lincare Holdings Inc.LNCRg, yks
Lindsay CorporationLNNg, yks
Lowe's Companies, Inc.LOWg, yks
Lam Research CorporationLRCXg, yks
Mastercard IncMAg, yks
Matthews International CorpMATWg, yks
MBIA Inc.MBIg, yks
McDonald's CorporationMCDg, yks
Moody's CorporationMCOg, yks
Mercury General CorporationMCYg, yks
MEDNAX IncMDg, yks
Metropolitan Health Networks Inc.MDFg, yks
Medtronic, Inc.MDTg, yks
Media General, Inc.MEGg, yks
Multi-Fineline Electronix, Inc.MFLXg, yks
McCormick & Company, IncorporatedMKCg, yks
Mueller Industries, Inc.MLIg, yks
Altria Group IncMOg, yks
Marathon Oil CorporationMROg, yks
Microsoft CorporationMSFTg, yks
Minerals Technologies IncMTXg, yks
Murphy Oil CorporationMURg, yks
Munich ReMUV2.DEg, yks
The Men's Wearhouse, Inc.MWg, yks
MWI Veterinary Supply, Inc.MWIVg, yks
National Instruments CorpNATIg, yks
Nabors Industries Ltd.NBRg, yks
99 Cents Only StoresNDNg, yks
Noble Corporation New Common Stock - SwitzerlandNEg, yks
Nike IncNKEg, yks
National Presto Industries Inc.NPKg, yks
National Research CorporationNRCIg, yks
Northern Trust CorporationNTRSg, yks
NVR, Inc.NVRg, yks
Novartis AG (ADR)NVSg, yks
Northwest Bancshares, Inc.NWBIg, yks
National Western Life Insurance CompanyNWLIg, yks
The New York Times CompanyNYTg, yks
Omnicare, Inc.OCRg, yks
Oceaneering InternationalOIIg, yks
Oil States International, Inc.OISg, yks
Omnicom Group Inc.OMCg, yks
Paychex, Inc.PAYXg, yks
Patterson Companies, Inc.PDCOg, yks
Peet's Coffee & Tea, Inc.PEETg, yks
PepsiCo, Inc.PEPg, yks
Pfizer Inc.PFEg, yks
The Procter & Gamble CompanyPGg, yks
The Progressive CorporationPGRg, yks
PerkinElmer, Inc.PKIg, yks
Pall CorporationPLLg, yks
PNC Financial Services Group IncPNCg, yks
Pentair, Ltd. Registered SharePNRg, yks
Panera Bread CoPNRAg, yks
Power Integrations IncPOWIg, yks
Phillips 66PSXg, yks
Patterson-UTI Energy, Inc.PTENg, yks
Pethealth Inc.tse:PTZg, yks
Raven Industries, Inc.RAVNg, yks
Rent-A-Center IncRCIIg, yks
Rowan Companies PLCRDCg, yks
Red Hat IncRHTg, yks
Raymond James Financial, Inc.RJFg, yks
Ralph Lauren CorpRLg, yks
Ross Stores, Inc.ROSTg, yks
Red Robin Gourmet Burgers, Inc.RRGBg, yks
The Ryland Group, Inc.RYLg, yks
Boston Beer Co IncSAMg, yks
Starbucks CorporationSBUXg, yks
Schnitzer Steel Industries, Inc.SCHNg, yks
Charles Schwab CorpSCHWg, yks
Seaboard CorporationSEBg, yks
Sealed Air CorpSEEg, yks
Smithfield Foods, Inc.SFDg, yks
StanCorp Financial Group, Inc.SFGg, yks
Stockland Corporation Ltdasx:SGPg, yks
Sherwin-Williams CompanySHWg, yks
Sigma-Aldrich CorporationSIALg, yks
The J.M. Smucker CompanySJMg, yks
SLM CorporationSLMg, yks
SM Energy CompanySMg, yks
Scripps Networks Interactive, Inc.SNIg, yks
Stewart & Stevenson LLCSNSg, yks
SanofiSNYg, yks
Sonic CorporationSONCg, yks
Spirit AeroSystem Holdings Inc.SPRg, yks
Stericycle IncSRCLg, yks
Sempra EnergySREg, yks
Simpson Manufacturing Co, Inc.SSDg, yks
STERIS CorpSTEg, yks
STEC, Inc.STECg, yks
SunTrust Banks, Inc.STIg, yks
St. Jude Medical, Inc.STJg, yks
Superior Industries International Inc.SUPg, yks
Silvercorp Metals Inc. (USA)SVMg, yks
Swift Transportation CoSWFTg, yks
Stanley Black & Decker, Inc.SWKg, yks
Sensient Technologies CorporationSXTg, yks
S.Y. Bancorp, Inc.SYBTg, yks
Stryker CorporationSYKg, yks
Synaptics, IncorporatedSYNAg, yks
SYSCO CorporationSYYg, yks
Taiga Building Products Ltd.tse:TBLg, yks
Tidewater Inc.TDWg, yks
Tesco PLClon:TSCOg, yks
Teleflex IncorporatedTFXg, yks
Target CorporationTGTg, yks
Tiffany & Co.TIFg, yks
Team, Inc.TISIg, yks
The TJX Companies, Inc.TJXg, yks
Torchmark CorporationTMKg, yks
Tompkins Financial CorporationTMPg, yks
Toll Brothers IncTOLg, yks
Tootsie Roll Industries, Inc.TRg, yks
Transatlantic Holdings, Inc.TRHg, yks
True Religion ApparelTRLGg, yks
T. Rowe Price Group IncTROWg, yks
Tesoro CorporationTSOg, yks
Total System Services, Inc.TSSg, yks
Universal Health Services, Inc.UHSg, yks
UMB Financial CorporationUMBFg, yks
UniFirst CorpUNFg, yks
UnitedHealth Group Inc.UNHg, yks
Union Pacific CorporationUNPg, yks
UNS Energy CorpUNSg, yks
Unit CorporationUNTg, yks
Urban Outfitters, Inc.URBNg, yks
U.S. BancorpUSBg, yks
United Stationers Inc.USTRg, yks
Universal CorpUVVg, yks
Visa IncVg, yks
The Valspar CorporationVALg, yks
Varian Medical Systems, Inc.VARg, yks
Village Super Market, Inc.VLGEAg, yks
Valmont Industries Inc.VMIg, yks
Verisk Analytics, Inc.VRSKg, yks
Westinghouse Air Brake Technologies CorpWABg, yks
Walgreen CompanyWAGg, yks
Waste Connections, Inc.WCNg, yks
Western Digital CorpWDCg, yks
The Wendy's CoWENg, yks
Wells Fargo & CompanyWFCg, yks
Wal-Mart Stores, Inc.WMTg, yksMaybe
W.R. Berkley CorporationWRBg, yks
World Acceptance Corp.WRLDg, yks
Williams-Sonoma, Inc.WSMg, yks
Aqua America IncWTRg, yks
Woodward IncWWDg, yks
Wolverine World Wide, Inc.WWWg, yks
Exxon Mobil CorporationXOMg, yksMaybe
DENTSPLY International Inc.XRAYg, yks
Zimmer Holdings, Inc.ZMHg, yks
New York Community Bancorp, Inc.NYCBg, yks
DineEquity IncDINg, yks
Kate Spade & CompanyKATEg, yks
G&K ServicesGKg, yks
HNI CorporationHNIg, yks
brown-forman 'b'BF.Bg, yks

SEC Filings

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Scans: Steady BVG with Low Dilution

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Value Investing (Equities)

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Equities ::: a subgroup of:

Equities ::: a subgroup of:


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