Bull vs Bear Case
- Thread starter waggie945
- Start date
Arnott states that the average corporation is assuming that a defined benefit plan will make an 8.5% to 9% return in the years ahead, yet these guys are severely overestimating what the performance of their pension funds can do. If you use the just under 5% long term return on long Treasurys - - - and realizing that anything beyond that is speculation on the ability to earn higher returns than the assured return - - - you are looking at a 4 percentage point overstatement in the return assumed for pensions.
If you take that four points away, there goes between 15% and 20% of S&P earnings. If management stock options are fully expensed, there goes another 10%-15% of S&P earnings. So Arnott would argue that 25% or thereabouts of S&P earnings are fictitious.
Take the "fluff" out and you are left with a payout ratio that's somewhere in the 50% range, not too far from historical returns.
Right now the S&P 500 is due to earn roughly $60.00 per share this year and is anticipatiing a 16% year over year profit growth for the S&P, the largest growth since the 19% gain in the first quarter of 2000. Thus, the S&P is currently at a P/E of 19.
Priced to and for Perfection?
If you take that four points away, there goes between 15% and 20% of S&P earnings. If management stock options are fully expensed, there goes another 10%-15% of S&P earnings. So Arnott would argue that 25% or thereabouts of S&P earnings are fictitious.
Take the "fluff" out and you are left with a payout ratio that's somewhere in the 50% range, not too far from historical returns.
Right now the S&P 500 is due to earn roughly $60.00 per share this year and is anticipatiing a 16% year over year profit growth for the S&P, the largest growth since the 19% gain in the first quarter of 2000. Thus, the S&P is currently at a P/E of 19.
Priced to and for Perfection?
waggie, have you nothing to do in this great day?
For you i have a tip. 1133 is a good support for today.
Bye!
Chapa!
For you i have a tip. 1133 is a good support for today.
Bye!
Chapa!
What sort of antique nineteenth century commercial mumbo jumbo bases a pension fund performance on what it should pay its members relative to final salary!!
A pension fund can and should only pay a result (ie a final investment share for buying a pension annuity) in ratio to contributions made for a member plus investment growth thereon. That way there can never be a pension fund deficit or surplus.
For goodness sake, when is the whole idiot pension fund profession and its half baked gurus going to get real?!
A pension fund can and should only pay a result (ie a final investment share for buying a pension annuity) in ratio to contributions made for a member plus investment growth thereon. That way there can never be a pension fund deficit or surplus.
For goodness sake, when is the whole idiot pension fund profession and its half baked gurus going to get real?!
Quote from waggie945:
Another "after-the-fact" call.
Gee, why am I not surprised???
Yes, weekly pivot points. I know you like pivot points waggie.
Yes, i wrote after the ES hit this pivot point. Its not my intention to be a prophet. It´s just another good point to trade. Simple!
Chapa!