Derek Moore and Jay Pestrichelli join up once again to talk about whether the forward PE ratio is getting overextended. Then, they discuss where we are in the 4-year Presidential market cycle, years with the most all-time highs, the US Dollar and interest rates, and PCE inflation numbers. Later, they get into the dynamics of the MicroStrategy convertible bonds and how they resemble options.  Finally, they talk through the option dynamics on MicroStrategy include what the implied volatility is, what it is implying for a move over the next year, and what the breakeven levels would be on a 1-year option. Hint, it may be crazy!

 

MicroStrategy convertible bonds explained

MicroStrategy option implied volatility

Price of the 1-year MicroStrategy straddle and breakeven levels

2025 Wall Street S&P 500 Index year end targets

Looking at how many times the markets are average

Inflation is still above the 2% Fed supposed target so what now?

US Dollar index and interest rates

Which year had the most intra-year all-time highs?

1st year of the presidential cycle and the market

Forward PE ratios are extended so is that an issue?

Makeup of the S&P 500 Index companies is different today than 40 years ago

Checking in on earnings estimates

 

Mentioned in this Episode

 

Historical Market returns S&P 500, Tbills, Tbonds, gold, and housing since 1928 from Professor Aswath Damodaran and NYU Stern School of Business

https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html

 

Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT

 

Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt

 

Derek’s book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag

 

Contact Derek derek.moore@zegainvestments.com