Are Stocks Overpriced? Fritz Meyer Economic Update, September 2021

Class Description: Are Stocks Overpriced?

The S&P 500 is trading at 21 times forward earnings estimates, a high P/E multiple by historic comparison, but not as high as the 25 P/E of the peak of the stock-price bubble in 2000. Despite high P/E ratios, the Fed’s valuation model shows stocks are reasonably valued compared to bonds. With bonds yielding near an historic low and negative returns on bonds after inflation, the earnings yield of stocks is relatively attractive, even as the stock market breaking record highs.   

Is the Delta Variant peaking? Dr. Scott Gottlieb said last month that “this is the final wave.” The CDC’s latest Covid model composite suggests that U.S. cases are peaking.

Stocks shrug off prospects of the taper and trade at record highs. In his August 27^th Jackson Hole statement, Fed Chair Powell was clear that the Fed now considers that its inflation mission has been accomplished but that its full employment jobs mission needs more time. A tapering of its bond-buying program might begin late this year; but short-term interest rate hikes are still a distant prospect.

Economists are looking past August’s slowdown in new job formation and, while trimming Q3 GDP estimates, expecting the expansion will continue as the Delta Variant peaks. The latest data: income and spending, ISM purchasing managers indexes, housing construction, LEI are all strong, and cash available for consumer spending (M2) is astounding.

Inflation is surging but it’s transitory, according to the Fed. The topic is under considerable debate. For the first time, however, Fed Chair Jerome Powell, in his Jackson Hole keynote speech, gave five explicit arguments for transitory inflation.

In this month’s webinar we’ll cover these topics, update rising earnings forecasts, compare the top market strategists’ beginning-of-year forecasts with how the year is actually turning out, and more.

This webinar is eligible for one hour of CE credit towards the CIMA® and CPWA® certifications, CFP® CE, PACE credit toward the CLU® and ChFC® designations, and live CPA CPE credit.

Free To A4A Members: 12 CE Credit Financial Counseling Course

If you missed the first eight classes of the financial counseling course, it's not too late to catch up.

The 12 credit CE course is free with A4A membership and the first eight classes are available on-demand. The next four classes will become conducted live every Wednesday through October 6. 

Successfully completing the full 12-credit course earns the Certified Financial Counselor^™ designation and digital badge.

To maintain the designation and badge, CFC^™ practitioners will need to take two classes every year about applying financial counseling conditions in the current conditions. 

The first eight classes received an average rating of  9.7 from attendees and Frank Murtha, Ph.D., fits right in with A4A's lineup of gifted instructors. Learn more and start the financial counseling course right now.