Analysts say earnings at financial companies rose 120 percent in the fourth quarter, accounting for all of the income increase in the Standard & Poor’s 500 Index, and will triple by 2011, climbing four times as fast as the market. Should the estimates prove correct, the shares are trading at a 15 percent discount to the index, data compiled by Bloomberg show.
When information is well-presented from a credible source, it is difficult to challenge.
Stocks, bank sector included, are not rising because they are cheap. On the contrary, in terms of ten year dividend yields, follow the money not the accounting gimmicks, they remain quite expensive at 2.1%. Historically cheap was 1920, 1932 and 1982. Dividend yields were 12.7%,12.3% and 6.4%, respectively.
Stocks bottomed on 03/09 with 10 year dividend yields at 2.92%. That's hardly historically cheap, yet stocks still rally. The Weimar Republic* experience provides an explanation - devaluation.
S&P 500 Real Dividend Yields, 10 Year Average:
Source: bloomberg.com
*Source: en.wikipedia.org
0 comments:
Post a Comment