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Oppenheimer Holdings Inc. Message Board

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  • superbmomentum superbmomentum Apr 13, 2011 7:31 PM Flag

    A forward P/E of 6.98 times!

    Here is an update on the issue of forecasting a flat return on equities but recommending to position your portfolio in excess of 50% in equities...

    ....although I still believe an optimal asset allocation mix should be primarily determined on the investor's risk tolerance and not stock market price predictability or forecasting ability...

    ...and although I really don't buy the short term vs long term investment strategy clarification....

    ....and although I'm pretty sure the equity allocation does not include long/short positions...

    ...however, I do like this new spin on things!  The new spin is: invest in high yielding stocks!

    ...although the S&P is trading at historic lows as far as yields are concerned...1.7% yield on the S&P on a 4.3% median [according to Robert Shiller's chart   http://www.multpl.com/s-p-500-dividend-yield/ ]....

    ...and although 80% of the S&P is yielding less than 3%...

    ....however, it is an interesting spin on things....I don't know what the average yield is on the top 20% or top 100 yielding S&P 500 companies...but let's assume it's somewhere near the 5% mark...5% equity yield vs. the lower yielding bonds is not that bad of an excuse to go long equities....

    ....although I'm assuming you are paying more inv. fees than bonds that would incrementally reduce the return differential vs. Bonds....

    ....and although you might be in a riskier asset class than bonds...

    ...however, it might actually justify the high equity allocation %s.... 

    ....so although all this may sound a bit paradoxical, it might not be strictly about an asset allocation strategy or a passive return, or a forecasting strategy or active return, as much as it is a stock selection strategy within the asset allocation strategy or the interaction effect!  OK, I'll buy that!

 
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