Friday, 15 July 2011

US Equity Valuation Based on GDP Growth

For students of economic forecasting and analysis, here is another way to value US equities using GDP.
Based on this methodology, the SP500 is currently at or slightly above fair value. It is a  good idea to compare this methodology with Tobin's Q and Shiller's CAPE, both of which indicate, for June of 2011, substantial over valuations of US equities.

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