If You're In It for the Long Haul
Earnings yield is perhaps one of the most widely used metrics when determining overall market valuation. That's because it provides an easy and revealing way to look at the current valuation of stocks -- and to compare them to bonds, which compete with stocks for investors' capital.
So investors should pay attention to stock and bond yields, because the relationship between the two can be particularly revealing. The higher the yield on stocks is, the more attractive they are -- or, to put another way, the more undervalued they are. So if the earnings yield on stocks is higher than yields on bonds, stocks are considered more desirable (i.e., more undervalued) vs. bonds -- and vice versa....458 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
There’s no substitute for a trading floor to get great ideas, so Jim Cramer created a better one at Real Money and blogs there exclusively. We then added legendary hedge fund manager, Doug Kass, with his exclusive Daily Diary and best investing ideas. Staffed with more than 4 dozen investing pros, money managers, journalists and analysts, Real Money Pro gives you a flood of opinions, analysis and actionable trading advice found nowhere else, and allows you to interact directly with each expert.
Already a Subscriber? Please login.
