Arezi Ratio for Apr 4


*                         3/14     3/21     3/28     4/4/22
S&P 500 Index             4204.31  4463.12  4543.06  4545.86
Trailing 12 month PE      21.42    22.41    22.80    22.80
Trail Earnings yield      4.67%    4.46%    4.39%    4.39%
Forward 12 month PE       19.78    20.75    21.08    21.08
Fwd Earnings Yield        5.06%    4.82%    4.74%    4.74%
90 day tbill yield        0.40     0.42     0.55     0.53
10 year tbond yield       2.00%    2.14%    2.48%    2.38%
Arezi Ratio               0.09     0.09     0.12     0.12
Fed Ratio                 0.40     0.44     0.52     0.50

The Arezi Ratio is the 90 day tbill yield divided by the trailing
earnings yield of the S&P500. A low ratio means that stocks are undervalued.

The “Fed Ratio” is the 10 year treasury bond yield divided by the
forward estimated operating earnings yield of the S&P500. A low ratio
means that stocks are undervalued. Thus, a ratio of 0.71 for example
means, according to Yardeni, that stocks are cheaper than “fair value”
by 29%.

The ‘S=120-50*Arezi Ratio’ formula indicates an allocation of 114%
stocks, -16% cash this week.

Other timing indicators:
The S&P index is above its 200DMA. - Bullish
We are in the Nov-Apr part of the year. - Bullish
The trailing PE ratio of the S&P is above 17. - Bearish
The treasury yield curve is normal. - Bullish

A composite allocation may start with the Arezi formula and subtract 10%
for each bearish indicator. The current target allocation is 104%.

An alternative allocation, using S=120-30*Arezi Ratio and the first
two of the other timing indicators, produces a target of 116%.

Elan

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