Where do we rank?


The percentile rank helps you get a feel of where you are in relation to history – my analysis is based on twenty five FTSE-100 bellwether shares analysed since 1992 to create a proxy for the index tell me that we are in some pretty tricky territory.

Price to sales is one of the best indicators of future 5 year returns – the higher the PS the lower the return – look at the graph below


Currently above 75th Percentile all observations and not far from 07′ peak

The Cyclically Adjusted Price Earnings Ratio (CAPE) is also closely watched – the statistical relationship with future 5 year returns is lower but you get the idea


Similar story to PS

This leads me to question whether there is real value in the broad FTSE 100 at present – individual shares or sectors may be more attractive but the overall market whilst not extremely overvalued may well be expensive.



Leave a Reply

Your email address will not be published. Required fields are marked *