I know the fed model is that is the market rate is below the 10 year US Treasury bond then it’s overvalued. I don’t know the Yardeni model. The Molodovski effect is just when you have high P/E for a company with low EPS at the low end of the economic cycle and low P/E fora company with high EPS at the high end of the cycle.
I always forget Yardeni. It has something to do with 5-yr consensus growth forecasts and earnings yield or some such.
topher Wrote: ------------------------------------------------------- > Will we need to know the dumb history questions > about the Sherman Act, Clayton Act, etc? Let’s take this one step further Sherman - implemented anti-trust measures but they were unenforceable Clayton - Built on Sherman and made a list of illegal business practices as well as made FTC CF - took it one step further and made asset purchases regulated, closed loophole with C and V mergers Hart and friends - all potential mergers to be reviewed
oh sweet google: Basically, Yardeni’s Fed model compares bonds (the 10-year Treasury note) and stocks (those in the Standard & Poor’s 500 index), the premise being that their values should never be too out of whack with each other. Yardeni first calculates the “earnings yield” for stocks, or the amount investors get in earnings for each dollar they pay. (The earnings yield is nothing more than the earnings/price ratio, which is the reverse of the more commonly used price/earnings ratio.) Yardeni then compares the earnings yield on stocks to the yield on the 10-year Treasuries. The idea here is that if the earnings yield on stocks is above the 10-year Treasury yield, then stocks are a better value. If the yield for Treasuries is higher, then they are the better buy.
What a stupid thing to discover 
^ that is the definition of Fed Model as well.
molodovsky: low P/E in up market and high P/E in down market Correct?
^correct
with all the molotov cocktails thrown in to boot! (remember vodka). correction for molodovsky - average ROE * current BVPS = EPS to use.
is that avg ROE over the life cycle? I remember two ways to do it
Yeps average ROE over life * current BVPS
like any of us are normalized…
I’m at the maturation part of the industry life cycle, heading into stab and then into decline. What is growth rate in sales and ROE for mature, stabilization, and decline?
mature maybe growth rate in sales growing a little still, stabilization topping off, decline declining? ROE > r, = r, < r ?
Mature - ROE is high, sales growth rate is growing a little Stab - ROE goes to avg of economy and rate of sales growth starts to slow Decline - sales growth rate same as GDP which is a decreasing sales growth rate (so sales level is increasing at a declining rate), ROE declines below that of the economy
Just curious - is nobody working today or just slacking? Job is also important to safeguard.
lol slacking. I’ve been slacking and will continue to slack until exam day. I am doing work, but at a snail pace.
can some explain a little more on molodovisky like like Ban did on Yaden fed model Fema French added size and value as factors to influence returns (The french language is also important its value and size are growing) Pastor Stumbrogh( not sure of spelling) added liquidity. just remember Pastors baptize people so they need liquid (water) hence he added liquidity to Fema french model
i took today off hence my frequent posts. tomorrow the same. will do BSAS afternoon in the Am and then more review manana. this weekend will be UNREAL. at least 25 hrs. we may have to bump zimzim’s thread last year to get pumped- he was all fired up. crap, i may need to call him and get him to just post for the sake of posting to get us all crazy.
Average ROE over the last complete business cycle multiplied by the current book value per share.