Tag Archives: Market Valuation

Market Valuation Update … How are we doing? Forward PE Ratio Review

As mentioned multiple times … with recent examples here and here by almost any metric Capital Market valuations have been and are stretched.

As a reminder this does not mean that markets have to come tumbling down to earth … just that heightened risks of sharper declines may be possible. Also as a reminder, just like our teenager with oversized clothes grows into them … as earnings increase faster than Capital Markets rise, valuations can come back in line! YAY

Updated Valuation Metric from our Friends at JPMorgan

And while still stretched take note of the very far right of the graph as it has smartly turned over as earnings outpaced Capital Market Growth

This is why the Graph is moving in a better direction – huge expected earnings in view….


Still no time to swing for the fences, which we never do- but good progress…

Have a Great “Better Valuations” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.



Where did all the stocks go? Implications

In a strange and subtle way – we have slowly but surely, had fewer public stocks available.

A preview of our coming Newsletter Article …

Where did all the stocks go?

Economics 101 says if we have the same demand and less supply, price will rise-

2017 Declining Stocks US and World Comparison

We were surprised to find out the total US stock headcount is down by almost 50% over the last two decades….

Key findings and reasons-

  • According to many, the costs have risen dramatically to nearly mid-teens percentage of total public offering
  • Continued initial public offering “Pops” – think SNAP – only to fizzle much below initial offering price
  • Increase demands from governance once public
  • Mergers – big public companies getting bigger through acquisition
  • Public company Buybacks – While an entire article could be written on this subject, in brief buybacks lower the total shares outstanding of a company are an appealing use of extra capital as a buyback increases reported earnings all other items considered AND are more flexible than a dividend. Lowering the dividend is very politically incorrect as it may lead investors to believe there is company weakness, with little to no similar mandates on buybacks.
  • Less flexibility being a public company – this especially true from home grown or family run companies
  • Adequate access to capital – in recent years capital from various sources such as debt offerings or venture investors has made it less necessary to go public, once a mandate for liquidity

So if there are less supply and at least similar demand — valuations may be increased!

Look for complete analysis in our Q 3 Newsletter.

Have a Great “Less Supply- Higher Price” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.