cityboy

Hmmm.... thats a good question

Fed Model = Earnings yield of 10 year treasury compared to earnings yield of index
1) Ignores risk premium
2) Nominal vs. real comparison
3) Ignores growth

Yardini Model = A rated Corporate - 0.1 LTEG


Could it be when it is a very high inflationary period?

Fed Model = E1 / Po and since the growth is high E1 is large and the earnings yield is high aka showing undervalued.

Yardini = showing the long term growth rate which is much more, so the A rated corporate yield is higher aka showing that the market is overvalued?


I really don't know this one.