Wednesday, April 9, 2014

Value Invest Much?

Two charts I made to capture the EV/EBITDA (Enterprise value to Earnings ratio) of the US stock market and US economy, as closely as possible.

First: The stock market

A = Nonfinancial Corporate Equities
B = Nonfinancial Corporate Debt
C = Nonfinancial Corporate Savings
D = Corporate Profits

(A + B - C) / (D)
[(Nonfinancial Corporate Equities) + (Nonfinancial Corporate Debt) - (Nonfinancial Corporate Savings)] / [(Corporate Profits)]
Graph 1

Second: The whole US economy

A = Nonfinancial Corporate Equities
B = Homeowner's Equity
C = Total Credit Market Debt
D = Total Saving
F = Federal Taxes
G = State and Local Taxes

(A + B + C - D ) / (E - F - G)
[(Nonfinancial Corporate Equities) + (Homeowner's Equity) + (Total Credit Market Debt) - (Total Saving)] / [(GDP)-(Federal Taxes)-(State and Local Taxes)]
Graph 2

Now, it would be nice if the data extended further back, and obviously we need some comparisons to their peers.  However, that will have to wait.

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