If we divide 1/Yardeni model, that should be the intrinsic P/E of the market. Correct?
Yep. I also think you may need to discount the Current PE by 1+ LTEG to adequately compare them
yeah I think so too, with all those models around this one
1/Yardeni = FORWARD P/E… right? So if you were trying to value the market TODAY t=0 using this metric you would need to discount by 1+LTEG as CFABlackBelt said… right?
Why are you discounting current P/E? And by current, you mean current Forward, correct?
1/yardeni is intrinsic P/E
jdane416 Wrote: ------------------------------------------------------- > Why are you discounting current P/E? And by > current, you mean current Forward, correct? Ya. I don’t have my notes in front of me. But I remember seeing a problem where you had to discount the forward to compare to the intrinsic.
Yardeni is beyond worthless.
So if we had the Forward P/E, Yardeni would be intrinsic Forward P/E or intrinsic P/E?
Yardeni is forward should be comped to fwd marker P/E so if they give you historical or current market P/E, adjust it to a forward P/E so you are comping apples to apples.
I’m trying to think it through. Yardeni uses a forward expectations- But I can’t imagine we’d have to discount it back to get intrinsic, I just can’t recall ever seeing this anywhere.
Yup P/E = Po/E1
1/yardeni is the forward P/E, though you don’t need to discount to compare. if that were the case you would also need a discount to compare fwd earnings yield to current which we don’t. I usually change the yardeni to a P/E and compare to the current P/E b/c it’s much easier for mee to see that a market is under priced if the P/E will be higher in the future rather than thinking about the earnings yield. the earnings yield is just backwards to me and I think it opens myself up to errors on the test.
FinNinja Wrote: ------------------------------------------------------- > 1/yardeni is the forward P/E, though you don’t > need to discount to compare. > > if that were the case you would also need a > discount to compare fwd earnings yield to current > which we don’t. > > I usually change the yardeni to a P/E and compare > to the current P/E b/c it’s much easier for mee to > see that a market is under priced if the P/E will > be higher in the future rather than thinking about > the earnings yield. the earnings yield is just > backwards to me and I think it opens myself up to > errors on the test. This is exactly what I was confused about. Thanks everyone. I thought it was P0/E1, but was not 100%.
idreesz Wrote: ------------------------------------------------------- > Yup P/E = Po/E1 Thats right, but there have been questions where they will give you current market price and most recent actual earnings on the market (P0/E0). So to compare yardeni to the market you need to get a forward market number - use 1+ltg for the MARKET to get P0/E1
june2009 Wrote: ------------------------------------------------------- > idreesz Wrote: > -------------------------------------------------- > ----- > > Yup P/E = Po/E1 > > > Thats right, but there have been questions where > they will give you current market price and most > recent actual earnings on the market (P0/E0). So > to compare yardeni to the market you need to get a > forward market number - use 1+ltg for the MARKET > to get P0/E1 Thanks. Will keep that in mind.
Sorry so you mean that you need to multiply the Eo by 1+LTEG to get E1 to compare it with the Yardeni Model? Am I correct to say that?