Where do we rank?

Percentiles

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

PS

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

CAPE

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.

 

 

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