Long time ago I found a fundamental market model that really works for generational investing. The model looks at how many dollars are investors willing to pay to get four quarters of dividends from the DJIA 30 stocks. Until the 1980s stocks were expensive at 28.80 dollars and a bargain at 18.30 dollars. Then it got crazy, at the year 2000 top it cost $70.03 for four quarters of dividends. At the 2009 low it was still not a bargain, still in the $20's. Today at the end of the second quarter it cost $42.90 to get four quarters of dividends. Since the historical average after year 2000 is around $48.00 fundamentals indicate a DOW-30 at 24,251 would be average and if the market got as crazy as the Clinton years 35,000 would not be unusual. Bottom line is if you bought into the year 2009 second quarter you should be cautious now and if it gets into the DOW 24,000 sell em and put it in the bank until bargains occur again. All that stated where are the markets generations wave wise. From the beginning in the early 1800s the wave FOUR low occurred late 1940s. Wave three of FIVE topped at the $70 cost of dividends year 2000 wave four low at year 2009 and the final wave 5 of all time frames started at the SP-500 1810 low so the market has met the minimum pattern off the year 1800 area at the SP-500 2484 high however final fifth waves can be a blow off bubble so hang on it could get real crazy next few years.
Funnymentals
#1
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#2
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Posted 06 August 2017 - 03:40 PM
Sorry if this may sound obvious, but what is the equation to come up with those dollars investors are willing to pay?
Thanks in advance!
#3
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Posted 06 August 2017 - 04:19 PM
Larry,
Sorry if this may sound obvious, but what is the equation to come up with those dollars investors are willing to pay?
Thanks in advance!
total up four quarters of DOW-30 dividends divide the current DOW-30 by the four quarters of dividends and you get the cost of dividends value. June 29th DOW closed at 21,287 four qtrs. Div = $501.83 so the value is 42.42 for a dollar of dividends since 48 is the average since top at 70 the Dow should be at 24,087 third quarter. Course all this is fluid until we have end of September values. Bottom line is stocks are expensive based on dividends paid however in final fifth waves it can get real crazy
