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Home Insights Guide to the Markets Portfolio Discussions

Portfolio Discussions

Use select charts from the Guide to the Markets to engage in portfolio discussions.

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    Guide to the Markets
     
    "On the Bench Appendix"
     
 
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Equities

Although the S&P 500 has more than doubled since its low in March 2009, investors have continued to heavily favor bonds over stocks. It is important that investors recognize the growth potential and diversification benefits of equities in a well-balanced portfolio.

Economic Expansions and Recessions
Stock valuations remain attractive, particularly compared to bonds
 
  • Looking at a variety of valuation metrics, such as price to book, price to forward earnings and price to cash flow, stocks aren't expensive relative to their long-term averages.
  • Stocks are especially attractive compared to bonds: In March 2000, the earnings yield on the S&P 500 was 4%, while the yield on Baa bonds was 8.3%, suggesting that relative to equities, bonds were attractive. Today, we see the opposite, as the S&P 500 earnings yield exceeds the Baa bond yield.
Discussion Slides
Economic Growth and the Composition of GDP
Stock Valuation Measures: S&P 500 Index
Real Earnings Yield and Bull Market Cycles

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