Heiserman sieht erst bei einem Abtauchen der SP-500 "in die hohe 400-Region" nachhaltige Kaufgelegenheiten. Der DAX dürfte sich bis daher auch noch mindestens halbieren.
Investing The S&P's Not Low EnoughBy Hewitt Heiserman
Street.com Contributor
10/29/2008 2:36 PM EDT I told subscribers in March that the S&P 500 was pricey at 1298. My opinion was based on a valuation process from Yale professor Robert Shiller.
I concluded:
The lesson of this chart is that while the S&P is a lot less expensive than the Himalayan levels of 2000, it is still not cheap at 23 times earnings. Indeed, 127 years of stock market history shows just three other times when real 10-year P/E ratios breached current levels: 1901, 1929 and 1966. In each instance, the multiple later contracted to below 10 times. Mean regression can hurt!
Since then, the S&P has declined another 28%, turning upside-down the retirement plans of millions of Americans. To avoid the humiliation of seeing these losses in black-and-white, we toss brokerage statements into the trash, unopened. Our IRA has become junk mail.
Of course, Wall Street isn't golf -- we can't take a mulligan on 2008. So as painful as it is, we must keep moving forward, even though the future may look less sunny than we envisioned a year ago.
To determine whether stocks are now cheap, let's update our 10-year P/E. This multiple is the current price on the S&P divided by the average of the last 10 years' worth of "as-reported" net income. The lower this multiple, the more earnings power on some of the world's greatest companies.
The advantage of a 10-year P/E, rather than the more popular trailing-12-month variety, is the smoothing of the highs and lows of the business cycle. A few years back, financials were wildly profitable. Today, their earnings are punk. A rolling average reveals what is sustainable.
The current 10-year P/E is 15.8 times, based on Tuesday's close of 940.5 and 10-year earnings of $59.38. The average multiple is 16.3 times. Blue-chips look slightly undervalued by this measure.
The chart below suggests caution, however. Since 1881, the 10-year P/E has had five peak P/E months: June 1901, September 1929, February 1937, November 1965 and December 1999. Peak P/Es ranged from 22 times to 44 times.
After the first four peaks, 10-year P/Es fell to between 5 and 9 times. In other words, when the market overshot the average to the upside, it later overshot to the downside.
S&P 500 -- P/E Ratio
(Chart unten)
Source: IrrationalExuberance.com, EarningsPower.com
As for the 1999 peak? We still stand in its shadow, if the past is prologue. Further, history suggests the next bull market like we had in 1982 to 1999 will start after the 10-year P/E troughs in the high single digits. Based on $59.38 of earnings and a trough multiple of, say, 8 times, this implies a final dip to the high 400s on the S&P.
Some of you are disgusted with stocks and are tempted to go "all cash." If so, consider the late Philip Fisher's advice of keeping at least 25% of your portfolio in stocks. Otherwise, you'll feel like a dope for missing 11% days like Tuesday.
If you are liquid, buy companies with compelling reward-to-risk profiles. Estimate intrinsic value and then buy when you have $3 to $5 of reward for every dollar of risk. Tilt the odds of investment success in your favor, especially since the market is in an unforgiving mood.
I use tangible book to create a worst-case scenario. For companies selling at less than tangible book, multiply the average of the last 10 years' worth of free cash flow by 8 times. This equates to a 12.5% earnings yield, which is an attractive spread to the risk-free rate of the 10-year Treasury.
Bargains abound. I am trembling -- but I am also trembling with greed.
Hewitt Heiserman conceived the Earnings Power Chart and the Earnings Power Staircase. A graduate of Kenyon College with distinction in history, Heiserman is a member of the Boston Security Analyst Society and the CFA Institute. He also authored It's Earnings That Count. For additional information, please visit Earnings Power.
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