Tag: stocks
Abstract Financial advice tends to focus on financial assets, but other levers may be more important for most households. This paper proceeds in three stages. The first section reports a simple Excel spreadsheet exercise that provides a stylized example of the tradeoff between returns and time spent in the labor force. The second section uses…
The brief’s key findings are: To assess whether stocks are overvalued, analysts often compare stock prices to companies’ cyclically-adjusted (10-year average) earnings. Today’s ratio of stock prices to cyclically-adjusted earnings appears high, which has often signaled a pending fall in prices. However, cyclically-adjusted earnings are unusually low right now because they include two recessions. As…
