- 1.January 2016 Advisory Commentary
- 2.February 2016 Advisory Commentary
- 3.March 2016 Advisory Commentary
- 4.April 2016 Advisory Commentary
- 5.May 2016 Advisory Commentary
- 6.June 2016 Advisory Commentary
- 7.July 2016 Advisory Commentary
- 8.August 2016 Advisory Commentary
- 9.October 2016 Advisory Commentary
- 10.November 2016 Advisory Commentary
- 11.June 2017 Advisory Commentary
As we celebrate the Dow Jones Industrial Average, S&P 500 & NASDAQ Composite Indexes charging to all-time highs, it feels appropriate to take note of several less than positive facts that investors may or may not choose to focus on. So, with an eye towards a more rational optimism, we present the following items without comment:
-U.S. durable Goods Orders are unchanged since May 2013. The Dow Jones Industrial Average is up 5000 points since then. S&P 500 total profits are the same as in 2012, yet the index is up over 70% since then.
-The trailing 12-month P/E ratio for the S&P 500 is 21.9. This is 31% above the 10-year average of 16.7. The forward 12-month P/E ratio for the S&P 500 is 17.7. This is 26% above the 10-year average of 14.0.
-At the end of FY 2006, U.S. gross Federal debt totaled just over $8.5 Trillion, with an annual interest cost of $405 Billion.
-At the end of FY 2016, U.S. gross Federal debt totaled just over $19.5 Trillion, with an annual interest cost of only $432 Billion
-The Wilshire 5000 Market Cap to GDP Ratio (A long-term valuation indicator favored by Warren Buffett) currently sits at 127.6%. The only higher readings were set at 136.5% at the height of the dot-com bubble back in 2000.
-The Shiller CAPE Ratio (A cyclically adjusted P/E ratio) now sits at 29.86. This is the highest reading for the ratio since the 2000 dot-com bubble top, and a reading nearly identical to the second highest ever, that of the market’s “Black Tuesday” top in 1929.
-As of January, the European Union banking system has 1.06 Trillion Euros of non-performing loans. This represents 5.4% of its total loans, which is roughly 3X the amount in the U.S. banking system. (Financial Times, 1/30/17)
Brian Weckman, RFC
Chief Investment Officer
Actis Wealth Management L.C.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The economic forecasts may not develop as predicted and there can be no guarantee that strategies promoted will be successful.