Ford Equity Research Indicates Stocks Reasonably Priced

By on July 13, 2010

According to Trader’s Narrative, based on last week’s low, the valuation model used by Ford Equity Research indicates stocks are slightly below fair value and the valuation of the S&P 500 is below the low reached in 2003.

Trader’s Narrative points out:

Ford’s price to value ratio (PVA) is similar to the Q-ratio but instead of just replacement cost, it takes into account earnings, quality rating, dividends, projected growth rate, and prevailing interest rates. Since the formula is proprietary, we don’t know its exact make-up.

SMA Comment: Replies to the post compare Ford’s valuation model to the Fed model which relies on interest rates for comparison. They make a good point as interest rates appear to be at artificially low levels.

Source: Trader’s Narrative

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