Yardeni Model

[RoccoLee]

According to the model, Justified forward P/E = corporate bond yield + d*LTEG.
But sometime I saw the question just gives you a trailling P/E, so must I convert it into forward P/E before justifying the equity market is over or under valued?

 

[S2000magician]

Yes, you should.

 

[myriam2222]

Sorry guys, isn’t rather justifed E/P = A rated corporate bond yield - d x LTEG?

 

[Id buy Willa C]

Yes, its justified forward earnings yield, not P/E.

 

[S2000magician]

Good point.
Nevertheless, if they give yo a trailing value, you need to change it to a leading (forward) value.

 

[RoccoLee]

I’d buy Willa Cather a beer wrote:
Yes, its justified forward earnings yield, not P/E.

Should it be E1/P0？ right?