Here’s yet another reason to be worried about the stock market: A valuation model with an impressive record says that stocks are as overvalued today as they were at the 2007 stock market peak.
The model comes from Dan Seiver, a member of the economics faculty at Cal Poly State University. Seiver also is editor of an investment advisory service named The PAD System Report. Though Seiver created the model nearly 30 years ago, he recently co-authored an academic study of the model’s effectiveness that appears in the current issue of the Journal of Wealth Management.
Seiver’s model is based on a single number that is published each week in the famed Value Line Investment Survey, published by Value Line, Inc. The number represents the median of the projections made by Value Line’s analysts of where the 1,700 widely followed stocks they closely monitor will be trading in three to five years’ time. Followers refer to this number as the VLMAP, which stands for Value Line’s Median Appreciation Potential. (more)
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