Calculator: 3 RORs

Combo The first two rows below define a Continuous Interest Equation for Market Price (3rd row).

This converts chart information to an equivalent bond.

Trend , The fourth and fifth rows convert dividends to another Continuous Interest Equation.

This and re-investment come from earnings and should grow at the same rate as price.

Yield The sixth and seventh rows give a third Continuous Interest Equation.

Earnings should grow at the same rate as price and dividends.

& P/E Calculator: StkCht

? Market %/yr.

? $.

? ...

? %/yr.

?

? %/yr.

? ? :%/yr.

for & :
fetch Div1 Div 2 EPS 1 EPS 2 Mkt

[result: ]

The Basics - Doubling Time

supplies the Continuous Interest formula A = Pe^rt. Later it will appear on charts as straight lines, but for now let's think of it as just another calculator. Plugging in ), t) and Pal) below puts stocks and bonds on the same footing for when you retire:

DOUBLING-TIME EXERCISE: E.g. ten k invested in an ETF called HAC.TO and just held returning 7%/yr would grow to 20k in ten years.

Try rates like %/yr with

retirement in years after

setting aside $k now.

Result A = $k.

The top box ETF is for overall Interest or dividend per year, plus any growth.

Express it as % of amount invested.

return of an investment. Try an Measured by this program as the %/yr slope of a StockCharts chart.

"interest rate" of Bonds have zero growth rate, yielding only interest.

Stocks' growth acts like interest, returning more than purchase price.

10%/yr; available right now from banks.

Try an aggressive rate of 20%/yr; available for now from an ETF holding Amazon, Google etc.

Here is the pattern you will find:
Divide the %/yr growth rate into 70 and you get doubling time.

Caveat: the above numbers do not take into account the effect of inflation:
.
Expected : %/yr. Purchasing Power: $k.

The Basics - This part of calculator converts the red dotted line below to an equivalent bond.

The first three fill-in boxes calculate only the bond's growth rate.

Rate of Return From Charts
Row 1: ends and length of logarithmic line touching EMA twice; gives chart R.O.R.

Here is the HAC.TO , with a red dotted line drawn along the EMA200 after you hit annotate:

The cursor has been moved to and we $17.13 for the price five years ago. After entering that, we moved the cursor to the and measured $24.69. The calculator returns about 7%/yr as .

Removing Up and Down Price Jumps:

The red dotted line has been moved to JUST TOUCH the red EMA200 line in two places (eliminating Until the next line - here we bridge over two wiggles to pick the slope out of it

volatility). Any straight line on the chart behaves like a bond yielding interest and the dotted line follows the price growth of the ETF, ignoring noise.

CAVEAT:
StockScores.Com Rate of Return has two parts; cash paid to you and growth of the ETF.

includes Click on the link to the left.

The dividend should not be entered here - it can be seen as an upward slope.

dividends.
Usually, use Yahoo Charts which Click on the link to the left.

The Yahoo chart slopes down - dividend is not mixed in.

exclude them.
more detail

Why it works: The charts we use are logarithmic. That converts an up-swooping price to a straight line. (The Y-axis values are closer together near the top). The slope of the line then translates into %/yr in the calculator.

Secondly, the price fluctuates in what are called Elliott Waves. The EMA200 suppresses these waves if they are shorter than a year, and bridging over two of the remaining wobbles will pick off the slope over a period of about four years.

The EMA responds well to slope measurements, but the the SMA200 that brokers commonly use tangles itself up attempting to measure %/yr. Avoid it.

The Basics: The next three fill-in boxes collect data to locate the price of the equivalent bond.

This also includes the information needed to judge entry times.

Measuring Chart Volatility

Row 2: Top and bottom of range at a single date:
Show Result

The math is obscure, but the resulting procedure is something we can easily DO. Open an independent tab with a chart and we will measure its Elliott waves.

The same formula for Rate Of Return can give the amount of Up - And - Down variation within one year; just measure tom at any :

Step One: draw in a red dotted reference line just The idea is to measure rise and run of a ramp.

The EMA wiggles due to volatility, so we bridge from peak to peak.

touching the red EMA200 twice.
Step Two: draw in another (blue) line parallel to it.
Step Three: Pull that line up so it just touches the top of the jumping and pull another one down to just touch the bottoms during a normal year. (Ignore COVID for now.)
Step Four: Reading the cursor position in the gray area at the bottom of the plot, measure the top and the bottom lines at ANY time on the plot. We found:
- The top line measures $39.47 in that gray area and the bottom line is $33.59 at the right hand side (now).
  - The actual dollar volatililty is 39.47$ minus 33.59$.
  - Percent calculated is dollar volatility / green line ($36.46).
- Include the date when entering these numbers above:
  
  Row 3:

At the end of Row 2, the program calculates the mid-point, along the green line, and projects it to $36.46 for the current date (trend). The volatility is shown in Row 3, first as a percentage relative to the green line and then as the number of years it takes the green line to climb from bottom to top of the trend.

When buying, this gives us something to go on. The most one can gain by waiting is half of the volatility, or 0.9 yr.

Why it works: Elliott Waves are a result of decisions by investors and their brokers. Decisions are guided visually, so we draw in the two blue lines visually too, defining a "statistical range" rather than something like Beta.

Percentages are referred to something and the program assigns the Geometric Mean of top and bottom at the date of measurement to be 100%; the green line. Thus it is only weakly related to purchase price unless you buy at the green mid-line.

The Basics - Notice that the purpose is to avoid paying too much, not trading.

To do this, enter the price in the third line.

Choosing an At or below the green line below.

Entry Point
Row 3: Type in market price and make the decision:

Show Result

Above the middle of volatility, store new $$$ in bonds or HAC.
Buy and Hold after corrections. (Do not trade after that.)

Here is the chart for the Low Beta ETF, with

a red This line should be used to fill in three boxes in the top row on the calculator, giving slope (R.O.R.).dotted line drawn along the EMA200 after you This line is only for slope, calculated after filling in 3 boxes in the top row below.hit annotate , and
two blue lines Uses point-slope method, requiring three more boxes in Row 2 below. drawn parallel to it, just touching the tips of the volatility. Line 2 below has been filled out with 33.59 and 39.47 at September 9.
Then a Calculated for you from the blue lines and their slopegreen dotted line shows the mid-way point and we can purchase a stock at or below it ($36.5) to avoid paying too much.

The Difference in prices divided by the green-line price the program calculatesmeasurement above indicates that the green line will take almost Price minus the green line was about half of the 1.8yr total volatility. a year to catch up with where the Far above the green line, which then rises only a few %/yr.market was when this screen shot was The price was right at the top of the blue volatiiity band.trapped .

Here is how to enter data for the and test for predicted entry advantage for buying below the green trend line:

If the entry price then the green line this will be shown:

The above "fill in the boxes" approach implements the " deeper dive" approach below; addressing market price. The following "basics" sections address two fundamentals; a company's earning power and the return of earnings to shareholders as dividends.

The Basics - Checking Earnings are tedious to determine for an ETF - this may have to suffice.

Dividends are the "proof of the pudding" and this will assess them for you.

Dividend Growth.
This Calculator Treats Stocks as Bonds. Dividends are the "coupons".

To the right, two bottom rows are added to the three ZLB.TO market price rows. - date pairs define a another straight line on a log plot

The slope is from the same equation as for prices. Note that the price entries have been re-done to exclude dividends. The growth rate (NOT dividend yeld) now matches the growth rate of price:

CAUTION - Stockcharts vs. Yahoo Charts:

To the right is the HPR.TO Preferred Share ETF, rendered (before inflation hit) first by theYahoo site and then by the StockCharts site.

The Stockcharts.com website mixes dividend yield and price growth The Yahoo site provides only Market Price info, which is better for this

The downward slope of the Yahoo chart is about -2%/yr and the StockCharts one slopes upward at about 2%/yr. The dividend yield is about 4%/yr, but the investor only gets half Everything makes sense; providing we understand what the charts include.

These are more than inputs; they . Thus the third box above returns 21-14=7yrs.

If dividend data is posted on web sites quarterly, with a clutter of dates, spaces etc., you can copy a year's worth and paste it into their upper right . If you highlight the clutter and replace it with "+" characters, notation will convert that into a simple sum of four quarters. If you want to average two years, appending ")/2" with an opening bracket will do that.

Understanding Dividend Growth and Yield:
(Growth of Return is %/yr increase relative to market price assuming you sell.

The %/yr increase in dividends paid should track that.

Market Value vs. The yield is %/yr dividend relative to market price.

However the growth rate of market value is also a return.

Cash Payout)
These two types of return appear above; the yellow slope (top line above), and the pink dividend Yield. is the return to the investor.

Rows two and three define a Market Price for the pink dividend yield in the bottom row. Note that this price is NOT the current price, but a running average along a trend line.

In the bottom rows, two Date - Dividend pairs define a another trend line on a log plot The calculator extracts two things, the pink in %/yr and a yellow , 6.1%/yr. (more)

Ideally, price and dividend should track each other, as they do in this ETF. However, when markets are very volatile, "Buy and Hold" investors can judge their future return from the dividend data.

The Basics - Checking Notice that the purpose is to avoid paying too much, not trading.

To do this, enter the price in the third line.

P vs. E Growth Rates.
(See Understanding P/E Ratios below.)

Below the Dividend section, Rows 6 and 7 provide two more date-earnings pairs, defining a third trend line using the same equation as for the dividend and Market Price calculations above. The slope of the earnings equation was measured at 6.9%/yr, which again shows this to be a trustworthy holding; P/E will stay pretty constant.

The entries

for price volatility determine $35 to be the center of the Market Price trend. The calculator divides that measurement by the equation's EPS value to give the P/E ratio of 13.5. Also shown is its inverse, 7.4%/yr, which is about double the dividend yield and thus Payout is about 50%.

Why it works: Our trick of monitoring

of dividends and making sure they grow at the same

rate as price ensures that we avoid speculative "growth" stocks.

After price wanders up too much many brokers will stop recommending it because

no longer is that good. (See page.) That means that the average price (green line) is partially controlled by dividends.

Ditto for earnings growth

, because other brokers will focus on the

and stop recommending it when earnings are low (they notice P/E rise too much). That also holds the green line down.

If the inverse of P/E

is lower than the dividend yield that will also raise red flags because

will be more than 100% of earnings.

Thus if a stock has really good P/E and dividend characteristics but is above the green line, we can park our $$$ (maybe in HAC.TO) for a while and wait. (See below.)

When it doesn't work The rise of price is actually driven by expectation of future earnings. That means there are many brokers who recommend based upon the "story" of a company rather than past performance. If R.O.R. measured for stock price is very high, we should let investors with deeper pockets have the gain and take the risk.

A better fit for scattered data can often be obtained by collecting several points from annual reports and then adding projected EPS from analyst reports on trading websites. To accomodate that (and scattered dividends) there is a fill - in - the - blanks calculator that loads, edits and replaces data. See below.

Understanding Price/Earnings Ratios:
, and
The "P/E Ratio" would be around 15 if $1 buys of earnings. However, it before volatility hits the market. It also when Central Banks raise

"Earnings Yield" vs. P/E:
Instead this calculator lets the user monitor these two factors by rendering and dividends as Net result; "apples to apples" comparisons and suppression .

In addition to three matching , the should compete with in the market and leave some earnings in the business.

Obtaining Intrinsic Value means the business is able to grow while paying part of earnings out as dividends.

The "slope" is the equivalent to bond interest, but is held within the company.

Slopes from Annual Reports:
Rows 4 to 7; type in Dates, Payouts and Earnings:

%/yr.

^nd Data Pt: Show Result

These pairs of rows serve the same purpose as the top row; they define two points on a straight line and the number of years between them. However, the time is entered as two calendar dates. The result is the slope of the line, expressed as %/yr growth rate of dividends. (The pair of rows for earnings work the same way.)

To keep it simple, the four user inputs can run the Continuous Interest Equation through only two points.
Advanced users can use "|" characters to separate annual values and do a Least Squares Fit through many samples.

These are more than inputs; they . In addition there are two large work areas where one can enter data that has been copied from the web. Then by changing clutter to plus-signs etc. one can reduce it to a total or average etc. and then copy it into the boxes above.

Reducing Many Points to a Pair:
One can enter X and Y points for dividends, earnings, book value etc. in a spreadsheet, prepare a Ln(Y) column, and then run a straight (logarithmic) line among the points using the SLOPE() function. Multiplying by 100% will then yield an average R.O.R. for whatever metric you obtain.

The sample spreadsheet provided will recalculate two data pairs to enter in the boxes above. (They are on a line that is fitted through scattered data.) Be aware, though, that if X is expressed as dates, you need to divide by 365Days/Yr.

Entering Many Points in Upper Dividend/EPS Boxes:
The algorithm in the spreadsheet has also been applied below to through of someone working in . These entries may also be used instead of a spreadsheet to reduce to (separated by "|" characters) to enter in the upper Dividend/EPS box of the main calculator.

Using The Trend Line Template:
The boxes to the right can also be used instead of a spreadsheet, and the data will be assembled into an array with vertical bar characters separating the numbers for the various years. The bottom row to the right is the array.

Step 1 is to press "Fetch Divs" or "...EPS" to load Line 4 or Line 6 into the boxes to the right.

Step 2 is to enter dividend or EPS data from Annual Reports etc. into the boxes for the years they are available. Note that you can click on a year and enter an expression into the Work Area below and it will be reduced to a single number in the box.

now functions as a limit to the number of years which are included in the Least Squares Fit.

Step 3 is to press "Put It Back", which will put the array into Line 4 or 6 and calculate R.O.R. etc. When the Engine of this calculator detects a vertical bar, it switches into a Least Squares Fit mode and runs a straight line through the data. Below the template is a second Work Area to make the Engine do other calculations.

Dealing With Market Risk Factors:

This calculator is for who want to select returns for retirement. may want to try market". However, "get rich fast" more often than it succeeds.

Resist the Stocks!
On the , safe bank don't with , and can still let you retire into poverty. Our list of ten ETFs is intended to find the between both possibilities and the calculator can extract these Rates of Return:

There are earnings and they are growing.

The risky period is over.

Earnings, The price grows at the same rate; thus P/E stays constant.

No surprises!

Market and Earnings support both cash payout and steady growth of the dividend.

Very good!

Dividend

Rate of arrives in two ways; ( and in a cash (

). Row one of our calculator will merge these two types of if we use Stockscores.com charts. The above middle number becomes

total %/yr return.

If a stock has settled into balanced growth of earnings, dividends and price, pays a cash dividend that is comparable to bond interest and less than earnings, that investment qualifies as "conservative". Our calculator can check that using only the Compound Interest Equation.

This list of ten ETFs has been selected on that basis (summer of 2021):

Cdn Financials Yahoo	Cdn Grocers <=Yahoo
Cdn Real Estate<=Yahoo	Cdn Utilty Cos<=Yahoo
Rotator (GIC-like)<=Yahoo chart	Cdn Low Beta<=Yahoo
US Hi-div Cov. Call<=Yahoo	US Tech Covered Call<=Yahoo
NASDAQ (Hedged)<=Yahoo	Energy Exposure<= XIU chart index

This is just P/E turned upside down and expressed as a %/yr number.

It will be split between paying back the investors and investing in the business.

Earnings Yield, This is a second %/yr number, a "benchmark" for bond returns.

Bonds compete with stocks for $$$ that could go into busineses.

Interest Rates, & This forces Central Banks to reduce the money supply.

That means increasing interest rates, which favors bonds.

Inflation,
The inverse of P/E is %/yr, and Graham's weighing machine adjusts it to about double competing return from bonds. We now are seeing inflation, and Central Banks are increasing interest rates to suppress demand.

With bank rate under 2%, Earnings Yield had by dipping under 4%/yr. The inverse of 4% is P/E of 25, which was seen in the S&P500. Low Interest => High Prices; and the is

P/E (and the market) drops when inflation threatens.
To the right, there is a Stagflation period in the center of the charts. What happened then (the 1970s) was that the price of stocks stayed flat in constant dollar terms, but the upper chart shows that their value to a retiree buying groceries with them dropped badly.

It to expect something like that but rather than going to cash out of fear, we have selected ETFs that show steady growth in . That is "intrinsic value", which will and experience a price jump when/if and interest rates drop:

Strong earnings can battle inflation and win.

To the left are healthy measurements for Power Corp. The yellow for Dividends agree with chart

, but earnings are strong enough to fund re-investment in lieu of debt.

The shareholder is about 9%/yr. Earnings Yield (1/12.0) is high enough to beat 8% worth of inflation.

The Earnings Yield matches return to shareholders quite well and is split about evenly between dividends (47%) and TD Bank, below, is another such example:

Safety: Assessing P/E is your (upside down) % earnings per invested dollar.

Yield is the % earnings allocated to "payout".

P/E and Yield:
Are We Getting Value for What We Are Paying?
(Aside: the List of Ten ETFs is sorted for safety with return.)

To the right are Rows 1 through 7 in the calculator, with the user inputs removed. TD Bank is a of many ETFs, and these measurements let us judge whether it is to its owners.

In , the Yahoo Charts'

slope is close to earnings growth

, so P/E is stable, and Dividends

grow somewhat faster. See below.

Note the symbol and the green Market Price trend line in line two. The calculator refers all percentages to this mid-line ,

, not purchase price. At the bottom the program draws two more lines through four user date/$$$ pairs to get two .

There is a direct payment of

per year as cash. That cash comes out of earnings, which is found to be

. (9.1 is the inverse of P/E shown and it is healthy.)

The Dividend Row indicates that Management has recently increased the Payout but it remains about 1/2. That is also healthy; TD Bank is well managed and regulated.

To the right is the same data for Saputo, which previously had a too-fast growth rate. Its earnings have dropped when COVID hit and only partly recovered. The market has adjusted downward too, but P/E is still high; Earnings Yield is under 4%/yr, but management has limited Payout to about 50%. Do not be surprised if the price growth rate drops further until P/E is around 15.

Unlike typical dividend payout, market greed is not well managed - watch for Multiple Expansion. That occurs when the Price and Earnings growth rates (

and

) do not match, as happened to the Saputo stock in 2017:

Early Warning: the R.O.R. of the price exceeds that of Earnings!
The drop below to $30 after buying at $45 is a loss of one third. OWCH.
Things take a while to get corrected when the price R.O.R. out-runs Earnings. The reason is that buyers falsely think that past growth indicates continued growth. For the chart below, this mentality has led to the price rising at 14%/yr (slope of the two parallel lines) while the earnings grow at 2/3 of that rate. Eventually enough people caught on that the growth stopped and people started dumping it.

To the right the slope is re-calculated and compared to that of earnings and dividends. There is a third straight line to the $30 point, and its slope has dropped to 9%/yr, which is a fair match to the growth rate of earnings and dividends. This calculator specifically checks for that.

Allowing fear and greed to contol our decisions, unfortunately, is normal behavior; stocks alternate between too fast and too slow. Worse yet, there are recurring sixteen-year periods when volatility gets extreme:

This is a common synonym for the P/E Ratio.

This calculator favors a %/yr form instead.

Multiple The price tends to rise faster than earnings when optimism grips the market.

P/E rises as a result, reducing its %/yr equivalent.

Expansion and The American companies had been paying higher taxes than "offshore" ones.

Trump et. al. reduced them, triggering a buying spree.

Trump Bump, :
The P/E "multiple" tends to wander near 20 (in USA; Canada 15).
It expands and contracts during The optimism phase of an Elliott Long Wave that repeats about every 32 years.

Secular Bulls The pessimism phase of the Long Wave.

There tend to be two bad crashes and no net gain for several years.

and Bears respectively. .

To the right the most recent 30 years are broken into '90s Secular Bull market, the Y2K crash (Dot Com and Housing Bubbles) and now the beginning of a new Secular Bull, interrupted by COVID.

Note that the blue Price line periodically rises above the orange Earnings line, indicating .

The 1990s ended with over-buying driving P/E up to about 30, and the two crises in the middle panel caused the P and E lines to cross wildly.

The third panel shows the effect of the Trump Administration cutting corporate taxes on profits. The indicators were suggesting that markets were not expecting runaway inflation, but COVID has upset things. .

P/E Historically P/E has expeanded for 16 years and then gone unstable for 16 years.

This alternation is quite reliable for defensive investing.

Roller Coaster: More " Roaring Twenties"?
Understanding how to use the List of Ten defensively.
(Be in the market now: P/E is rising. Rotate a bit in 2032.)

A Secular Bull Market is a period like the Roaring 1920s, where people just buy whatever is in fashion. Price rises faster than (Book) Value rises. Price to Earnings ratio P/E fast during Secular Bulls, and needs to be reduced.

A Secular Bear Market followed; the Crash of 29 reduced P/E fast and will be described in the next section. The result was the Dirty 30s, the second period to the right.

16 Year Alternations (Phases of a "long wave" phenomenon.)

Note the second trace; gold is a safe haven and when people believe that P/E has corrected. A post-war Secular Bull market followed the Dirty Thirties and the ratio shown rose with the DOW. People buy gold , which was yet to happen.

Another Bear Market (center) followed; the stagflation period, when gold prices and the dollar inflated and forced Central Banks to let both economic activity and the stock market to stagnate. Relief and the 90s boom came eventually.

During the third Bear Market, starting at Y2K to the right, gold rose (driving down the trace above) until the DOW had climbed above its previous two peaks. Then sentiment changed, gold price dived, and the present Secular Bull got underway around 2016.

Typically a Secular Bear includes two Black Swans, shattering the gentler volatility that charts exhibit during Secular Bulls. Three Secular Bears appear above.

Ordinarliy the next one would not be due until 2032.

However uncontrolled inflation might force one on us.

Secular Bears: Adjusting For Secular Bulls rise too fast, leaving earnings behind.

Secular Bears correct P/E, often wildly.

Substance
The Voting and Weighing Machines: "The father of value investing, Benjamin Graham, explained this concept by saying that in the short run, the market is like a voting machine--tallying up which firms are popular and unpopular. But in the long run, the market is like a weighing machine--assessing the substance of a company. The message is clear: What matters in the long run is a company's actual underlying business performance and not the investing public's fickle opinion about its prospects in the short run."

The Big Four forces in the market:

Inflation rates are driven by If people are optimistic they buy recklessly, inflating prices.

If they are pessimistic they don't invest or spend and prices drop.

Mass Psychology, which in turn drives Their mandate is to hold CPI inflation to about 2%/yr.

The "lever" they push to do that is mostly interest rates.

Central Banks (like a dog It is a feedback loop; interest rates prod consumers and consumers prod central banks.

Cause and effect get mixed together.

chasing his tail).
Interest rates are set by Central banks. High interest Consumers carry a lot of debt, and when rates rise, that is where their cash goes.

Fewer dollars are thus available and demand falls.

suppresses inflation but The Prime Rate triggers increased interest rate on all fixed income securities.

This causes bonds to compete with stocks for buyers.

drives down share prices.
Money supply consists of The actual supply of non-debt dollars in the system.

See "fractional reserve banking" in wikipeida.

M0, M1, M1, M2 and so on are categories of debt.

Banks create money in the form of promises to pay.

etc. and Possibly meaning "too many dollars chase too few goods".

Then prices will rise faster than the target of 2%/yr.

grows and The 2009 Financial Crisis led to a collapse of the money supply.

"Quantitative Easing" was invented to pump up M0 rather artificially.

shrinks according to interest rates and cash The ratio between M0 and what they are allowed to lend out.

There must be some cash on hand to prevent a "run on the bank".

reserve requirements.
Market sentiment (fear/greed) responds, taking us back to There is not enough fear in the economy.

People borrow too much to buy goods and services they can't find.

inflation or Meaning people have too few dollars for goods and services.

Then suppliers drop their prices or shut down.

deflation above.

To the left is the DOW; inflation-. The first third of the chart includes two world wars and the Crash of 29. Central Banks often mis-handled the Money Supply and inflation held the DOW flat. when cash was , and they rose when goods were . This period included a and then a very painful .

Things eventually and the DOW rose until , when inflation arose and forced Central Bankers to reduce the money supply to prevent inflation.

The result wasn't very good - stock prices stayed flat in present dollars, as shown to the right, but the purchasing price of those dollars caused the sharp drop in the middle of the to the left.

stubbornly maintained inflation, so the Central Banks guided the economy to rather than as in the previous "Dirty Thirties" Secular Bear.
Whether this will recur post-COVID is an open question.
Stagflation eventually abated when returned to , and the 90s had a prolonged Bull Market. Then things fell apart again (Dot Com bubble, last quarter of the chart). Central Banks by injecting liquidity, and Market Sentiment well. There was no danger of inflation , and of P/E lasted until about 2016. The Secular Bear produced minimal pain this time.

After the DotCom bubble and Financial Crisis things took off again as P/E ran up to adapt to very low return. Now, as a result, inflation is , but we are still in a 16yr .

: Will Inflation Trigger an Early
See Trump Bump and P/E Suppression. P.S. 2024: ans, no.

Hmm... Market Sentiment is not as of Nov 2022. To the right is the five-year chart for gold , for the time period just after the chart above. Gold is reflecting the Central action to stabilize things. (See below.)

What to do? Stocks went flat in the 1970s, which for the next few years. In any event, investing in could minimize the impact of inflation. Note too that present inflation rate is only about half of that of the 1970s - see historical chart to the left (click to expand).

The Gold/Inflation Story: Fear will drive investors to rotate into gold producers.

Run For E.G.: Gold, ZLB.TO, HAC.TO, ZWH.TO, XUT.TO & XST.TO.

Low P/E, steady P & E growth.

Growing dividend, strong yield.

Safe Harbor?

"Barbarous Relic": To the right is the chart for gold, with another rectangle to show the Secular Bear. During that time (LHS) gold rose, which is typical for a 16 year Secular Bear. What is NOT typical, though, is the way it starts rising after 2015.

Normally gold would continue to drop to the bottom of the formation over 16 years, but a second maximum appeared because of inflation-fear. "Quantitatitive Easing" (QE) was invented after 2008 to compensate for the collapse of debt-based bank accounts during the crisis. (Middle pink oval, indicating a crisis).

Since gold is "money" that cannot be quantitatively eased, it acts as a refuge in uncertain times. "Gold Bugs" fear inflation and did not believe that "printing money" was safe to do. However, the QE gambit - injecting cash rather than debt into the economy the money suppy.

Unfortunately the COVID crisis (right hand pink oval) soon added dramatically to the amount of injected . That was too much to take in stride; "too many dollars chasing too few goods", as of late 2022, has forced Central Banks to shrink the money supply by boosting rates.

QUESTION: Switch to Bonds/Gold as a Response?
Note that of non-inflating gold in inflating US dollars matches historical inflation rates. That is a trade-off, not something The number of "gold bugs" is stable; everyone seems to be waiting things out.

Bottom Line for Summer 2021:
Alternatives down the road: Bond Funds and Gold.

Defensive shares like grocers, utilities and REITs are always good.

The Market is the About 2016 it recovered from the Financial Crisis and started rising.

Typically that lasts another ten years.

Place to Be, but Watch COVID has disrupted supply of goods, sending prices up.

So far the bond market shows only mild concern about that.

Inflation.

To understand this, one should have explored the "magic of compounding" link and the link to using red-green-blue trend lines. If so, it is time to think about and Bear" markets.

Our basic strategy is to get into the market and stay there, but the chart of the DOW to the right shows nasty Secular Bear periods when people stop investing in stocks. The Elliott Wave for Secular Bears contains two panic periods, which are behind us (the Internet Bubble and Financial Crisis).

Secular Bulls and Bears typically last years each, so as of 2021 we have about one decade to Buy and Hold, before into defensive stocks and even gold around 2030. ETFs can more than double in that time.

OOPS! There Was a Third Panic-event, COVID-19.

COVID temporarily jarred the Ten ETFs out of their . The 50% jump in the 30-year chart for the price (top right) is saying that Market Sentiment and inflation again gripped those with a bent, after crippling fear from the Had died down. (Click to expand).

During the recent 2020 gray bar, COVID-19 has sent The S&P500 (lower inflation-corrected chart) has been pushed up by the . It is not how this will resolve itself when it is embedded in a Secular . (See choosing entry point.)

All this has driven up the CPI inflation rate away above the 2%/yr target, and Trump policies have sent for early in a Secular Bull. Thus our list includes defensive things (And Cdn stocks in general, with Utilities, RIETS and Low Volatility ETFs.) like HAC.TO until CPI comes back down and the S&P500 also makes a .

The above was written 2 years ago. In this scenario:

The five year old Bull Market is unlikely to be quenched.

We will muddle through inflation due to .
, gold and the market have been held flat by high interest rates.

Elliott Waves and their Wavelets have Several slopes are calculated above the chart below. The red one is a flat spot

There are three 12345 measurements, over 10%/yr. Average is under 4%/yr. %/yr RORs.
Price Outruns Earnings Only Part of the Time.

Idealized Elliott Waves: To the left is the classic behavior of a stock chart. The ABC phase is called a correction, and in the ZWB.TO chart below it takes the form of a (

).

The 12345 phase has a much higher , which is attractive for an investor to enter a stock, but often the result is getting caught in a correction; as happened with Saputo above.

This pattern is "fractal", meaning wavelets which also follow the pattern are within waves. They arise from the cycle of human nature and they are only partially predictable - buyers and sellers try to defeat .

The EMA Changes The EMA suppresses wavelets shorter than 1/2 year.

During Secular Bears that is not enough to help.

Elliot Waves Into Line Unlike in the diagram above, EMA corners are below the wave.

Advangage: they plug into the Continuous Interest Equation.

Segments:
Entering after an stock drops below the EMA200 helps a lot of buying and selling. The EMA200 limits the wavelets within waves to a 4-year time horizon and its slope is MUCH more reliable than the SMA200. In the example below we used points on the EMA to slopes:
This typically is seen in Secular Bull Markets like post-2013.

Such periods correspond to the 12345 phase below.

Low-volatility There are also corrections within the Secular Bulls.

We use them only to choose our entry points.

Flat Spots

The image shows four approximate straight-line segments, with arrows pointing to the showing up after a run-up in the Price Chart starts

The slopes of the straight line segments alternate between about zero and about 12%/yr so their should around 6%/yr. Note too that the volatility is in the blue box, and measurements of volatility for ZLB.TO give triple the . Thus it pays to wait until there is a pull-back of some kind.

CAVEAT: The EMA trick only works for low volatility and for good equilibrium between of market price, earnings and The reason; the EMA time horizon is about four years. Secular Bear markets don't qualify - they have about a 16 year time horizon, and they exhibit savage :

These are the ABC phase of an Elliott Long Wave and the last one was 13yr long.

Within these nasty flat spots there are usually two drops of 50% or more.

Secular Bears: High-volatility Elliott Wave Flat Spots
(These Also Result From Price Outrunning Earnings.)
Above is the S&P500 index since 1944, with rectangles for the and ovals for . This can be viewed as an Elliott "long wave", and the Secular Bears inflated price to earnings that have .

Let us turn our attention to the right hand two periods; a Secular Bear with two , followed by the first half of a Secular Bull, interrupted by the The market peaked at 2600 coming out of the '90s Bull and "crashed" to 1400 when the Internet Bubble burst. (more)

Plugging those numbers into the Continuous Interest Equation is 62%, and the second Financial Crisis drop is 73%. WOW!

The Preferred Strategy: Buy and Hold
(Hiding Out In Another example is ZLB.TO, which held RY.TO.

It rotates into low volatility stocks.

Low Volatility Shelters).
Here are those two periods for the which also dropped sharply; 50% and 59% respectively. To the left are the 2000 to 2024 measurements, indicating that XIU.TO did rather well. It continued to grow throughout the , but it was a wild ride!

Now What? - January 2024

The See "image". The line touches the peaks and its slope is %/yr growth.

The P/E at the left was very high after the 1990s Secular Bull.

Trend Line for the S&P500 from Investors had over bought internet stocks, which then crashed near the LHS.

Then they switched to running up Banks and a second bubble burst.

Y2K to 2024 (Image) along the The LHS Secular Bear corrected the previous high P/E .

Six more years in this RHS Secular Bull should run it back up.

EMA200 gives this The time period spans a full Secular Bull and unfinished Bear.

The P/E starts low, and is currently rising.

slope: ... and along the The end of Stagflation in the 1970's to the end of the Financial Crisis after 2010.

The chart is much wider than the first one above.

last 32-year The bottom trend line in the chart.

P/E ratio went very high in the middle and dropped back down during the bumpy sideways period.

Bull-Bear pair (Image) we get 2%/yr higher than recently (to the left).

This could be due to the current run-up being six years shorter than usual.

this slope: ERGO: Still Rebounding.
$15,000 increases the slope to match the previous Bull-Bear pair.

This assumes Earnings Growth stays at 7%/yr.

Raising/extending the top line (image) to The numbers in the boxes were adjusted to give 7%/yr.

Note that the market climbs faster than the trend lines.

32 years, we Resembling the "Internet Bubble" of the 1990's.

Investor greed would cause price to curve upward again.

project

POTENTIAL: From $5k To $15k. Thus it is possible that the S&P 500 by 2032; the theoretical end of the current It is also possible that it could less than double if the actual growth rate has .

Now let's see how fast earning power has grown:

is projected to grow at

. The S&P data, on the other hand, was distorted by the so 16%/yr is not representative. The CDN markets have been out of the limelight and show the expected 7%/yr.
Check -

and

.
The fundamentals above grew as ; 5 to 7%/yr. The price grew as ; for a Secular Bull period:

(Slope is measured along the bottom trend line this time.) As usual in a Secular Bull, price outruns earnings. However, COVID, war have moderated the amount of " ".

The OECD Projection to the right indicates that for the remaining six years inflation should stay near the 2%/yr target.

That and a strong EPS rebound after COVID argues for a rotation back into stocks, making a (image) and strong pull-back .

On the other hand, the (top row above) suggests that prices will before entering the next Secular Bear phase. The Berkshire data suggests $11000;

THREE SCENARIOS, and Three Guesses:

The above suggests one more surge as interest rates drop and money comes out of Fixed Income into stocks. Let's say 85% confidence level.

That leaves 15% for flat or dropping markets; possibly

The other extreme (15%) would be for and then a sharp pullback into a volatile but flat Secular Bear market.

The would be for the S&P to do a TSE-style muddle-through; a that has been moderated by the & inflation and then a during a Secular Bear market .

One Underlying Equation
(The Calculator Looks After the Following Detail:)

A Deeper Dive:

actually uses the approximate formula A = P(1 + r/n)^nt that is often used instead of the continous (exponential) formula above. The symbols mean

Top Box; (This box will more often be set to "rate".)

That translates into extracting %yr Rate of growth of charts, dividends or earnings.

Answer A (selected first box; displayed at bottom) is given by

your original P=$10k (second box) invested at

interest rate of r=7.3%/yr(third box)

compounded n times per year ( )

and sitting there for t=10 years (fifth box):

Notice that setting n=a zillion (continuous) eliminates it and changes the formula to A = Pe^rt=$20751k. This formula is used by banks to calculate interest.

To do that it has to be changed to r=Ln(A/P)/t.

Notice that it is not yield.

That happens to be the formula for the e^rt swoops upward on a normal plot.

A "log plot" makes it into a straight line by compressing the upper part of the Y-axis. "log plots" that market websites show us.

This same calculator can be reversed, to extract the Growth Rate from pairs of dollar values, growing or shrinking over a time in years. That is the mode in which we use the equation to manage Dividend and Earnings Growth rates, throughout the calculator above. It can also be extracted from scattered data above.

Why it works: This equation's growth rate r applies to every $$$ that is in an account at a particular instant (by averaging the whole account or ETF basket). That includes all accumulated previous growth (or decay in the case of inflation). That is also if its earnings track its total investment and/or if its share of the market is expanding or the company is shares.

Now comes a trick. Human perception also works this way; we focus on percentage change rather than of things. Brokers look at charts to make recommendations whether to invest new money in stocks or bonds, and their thinking works on percentage change too. That makes their decisions follow this Continuous Interest Equation, and we can predict their behavior with simple straight lines!

Average Inflation From DOW History:
(Subtract from R.O.R. for purchasing power of investments.)

The chart to the right shows 100 years of management of sometimes - nasty inflation problems by the US Central Bankers. There has been a trend toward doing it successfully, and the 2022 timeframe will be a test of how well they have learned. (The price of gold is dropping, suggesting the "herd" thinks they will succeed.)

Try various inflation scenarios in the above calculator for doubling time and observe their impact.

about 3%/yr, and Central Banks try to maintain a steady 2%/yr inflation rate. In the middle is the Stagflation period in the 1970s when they lost control and inflation rose strongly. As shown elsewhere, purchasing power of the dollar dropped while the DOW stayed relatively flat.

Drawing and Measuring %/yr Trends:
(Using the CalculatorSoup Website)

A StockCharts.com chart appears to the right; set up with the red line. (Do not use .) Press "Annotate" to draw lines etc.

A straight red line on a logarithmic chart traces out the Continuous Interest that banks use for "daily interest".

It touches twice which, using Calculus, gives a slope that becomes %/yr rate of return of an equivalent "bond".

Three lines have been drawn parallel to it with the same slope (R.O.R.) The blue lines have been pulled up and down to mark out a range the price moves in and the green line has been pulled to the of the range to identify when to the market.

Note the measurements below the chart, which you can make by moving the cursor to the locations indicated. Then plug the following into the CalculatorSoup calculator:

Top box; Rate(R)	2nd Box: RHS: $24.80	3rd Box: LHS: $17.77
4th Box: Continuous	5th Box: Time 5yr	Press Calculate

and you will see the answer 6.67% below.

Measuring Volatility requires a trick: enter top and bottom assuming one year:

Top box; Rate(R)	2nd Box: Top: $22.92	3rd Box: Bottom: $21.30
4th Box: Continuous	5th Box: Time 1yr	Press Calculate

and you will see the answer 7.33% below.

Then it is possible to plug in the rate calculated in the top table, plug in a mean of the upper and lower blue lines, plug in time between their measurement and the present and come up with the green trend line as of now.

Those maniupulation details have been programmed into the website's calculator to the right.

Conclusion: the equivalent "bond" has a pretty good return; growing at 7%/yr and fluctuating about 3.7% above and below the green line. It would be a couple of months before the green line rises to the present market price.

Reason for Starting With HAC in the Frame Above:
The HAC.TO ETF does not pay a dividend. The Stockcharts.com website mixes dividend yield and price growth together, which is good because that shows the true R.O.R. to an investor.

To the right is a Preferred Share ETF, rendered (before inflation hit) first by the Yahoo site and then by the StockCharts site.

The downward slope of the Yahoo chart is about -2%/yr and the StockCharts one slopes upward at about 2%/yr. The dividend yield is about 4%/yr, which the investor does not get because the value of his/her holding is depreciating, as shown by the Yahoo chart to the left. Everything makes sense; providing we understand what the charts include.

The other side of the coin is that summing returns for the investor blocks what this calculator specializes in; separating them out to detect market inefficiency. For Stockscores charts, drawing the above lines and plugging values into boxes gives a mixture.

Reason #1 for starting with HAC: chart slope measurements cannot mix growth with dividends because there are none.

Reason #2 is that the measured volatility of under 8% is very low, while for the Banks ETF the range is 19% (and can be 9% above the Green Line). Thus HAC.TO is a good "parking place" for cash when higher-yielding things like the Bank ETF are priced above their Green Lines.

ZEB.TO: A Pure-Bank ETF
(Using the CalculatorSoup Website)

Untangling Dividend Growth and Yield Measurements.
We will open up two links in new tabs: Yahoo chart and a calculator, which can give growth rates (left hand side here) for dividends and market price.

The ends of the green line measured

Date 2021 Aug 18 $33.33

Date 2011 Aug 13 $17.59 (10 yr.)
Market Growth Rate = 6.4%/yr from the calculator.

Oddly, the StockCharts plot below rises faster in 5 years, giving 9.9%/yr. Something funny is going on.

2021 dividends = $1.20
Market price was $37 (above the green line), giving Yield 1.2/37 = 3.3%/yr.

Aha - that is it. The StockCharts plot includes dividends, increasing the apparent slope of the plot. Total of the Yahoo Chart slope plus yield of 3.3%/yr is a good match; 9.7%/yr.

2016 dividends = $0.81 (5 years)
Entering that as P and $1.2 as A in the calculator, r = 7.9%/yr.

This should match the Yahoo Chart slope, and it is not bad but higher. The predicted total return is around 11%/yr. Maybe management is increasing dividends too fast???

Combined Return:
(Using Stockcharts.com)
To the right are the colored trend lines for ZEB.TO. The dividend plus chart growth rate is normally determined by making the red line just trouch the EMA200 in two places. However, COVID has spoiled that so we aligned the top Blue line with the peaks.

Blue lines mark the volatility (statistical range of 20%) and the Green Line shows the middle of the trend. Market Price is above the Green line right now, indicating that it is a poor time to enter (loss of 0.9yrs growth).

The gray patches below the chart are measurements that were made and entered in the calculator. Volatility is (Top-Bott)/Green line at any date and tends to be around three years worth of growth.

In general, using the StockCharts this way gives a very good measure of overall R.O.R. including yield. Then one should subtract quoted dividend yield and compare that to the growth rate (not yield) of dividends and the growth rate of earnings. The three growth rates should approximately match.

The first chart below typically is seen in Secular Bull Markets like post-2013.

We use the EMA200 to avoid over - paying.

Navigating There are also corrections within the Secular Bulls.

We use them only to choose our entry points.

Flat Spots The market moves in waves and our way of using the the EMA200

limits them to a 4-year time horizon and

includes them in Volatility measurements.
Enter wisely, but do not trade.

Buy At the EMA Trick:

The image to the right shows four approximate straight-line segments, with arrows pointing to the showing up after a run-up in the Price Chart starts

The straight line segments are described above where the was measured and plugged into the Continuous Interest Equation using a calculator rather than the Calculator Soup site.

During Secular Bulls, Buy and Hold Stocks.
Collect cash and await a dip to the EMA200.
The EMA200 (Exponential Moving Average) is delayed by 187 days, and in the process strongly filters out volatility. Thus it a trend, and if the price is rising, it will lie below the current price (green line) most of the time. ASIDE: most "chartists" and brokers use the SMA200- avoid doing that too because the EMA gives better R.O.R. measurements.

The EMA trick only works for low volatility such as as shown above. Secular Bear markets don't qualify - they have about a 16 year time horizon, and stocks exhibit savage unless they are "safe harbor" things like :

These are the ABC phase of an Elliott Long Wave and the last one was 13yr long.

Within these nasty flat spots there are usually two drops of 50% or more.

Secular Bears: Scary With No Gain
(These Also Result From Price Outrunning Earnings.)

To the right is the S&P500 index since 1944, with (Secular Bears) marked by and with ovals for . This can be viewed as an Elliott "long wave", and the Secular Bears inflated price to earnings that have .

The right hand two periods are a Secular Bear with two , followed by the first half of a Secular Bull, interrupted by the That Elliott Wave ABC phase is NOT amenable to EMA200 methods - the drops are too fast and last too long; and the 12345 sequence gets quenched.

Events:
To the right is an expanded view of the right-hand third of the S&P500 chart above. The flat spot contains two drops from about ; Two such convulsions, marked by pink ovals, are typical during Secular Bears. To the right is a third one, caused by COVID, which occurred within the current Secular Bull. It the uptrend.

Events These are often called Black Swans, meaning they are unexpected.

However, Secular Bears are predictable and high P/E is a warning.

like that quench The internet bubble from the 1990s Bull Market and the housing bubble were false narratives.

The COVID crisis is real.

False Narratives.
The middle chart is for the Canadian financial sector. All three events appear in it, but it continues to rise during the Secular Bear. That is a ; when a Secular Bear market is due, one should get out of sectors that are overheated and into sectors that have

For example the Dot Com Bubble during the pulled money away from the banks etc. "Hot" internet ventures exhibited P/E ratios that were either very high or negative. When the bubble burst, people turned to the strong dividends of banks and insurance companies. Their had grown faster than their stock price and P/E had Thus the price of Canadian banks tracked earnings growth, ignoring the Secular Bear.

There had also been a bubble in energy companies (chart below financials), and it also Then energy share prices dropped for more than a decade. The COVID crisis (third oval) introduced a very steep drop, and recently it has broken out of the , because earning power of oil companies had recovered.

Inflation - Response To Previous Interventions.
In the 2009 Crisis the Canadian Financials took a beating, but their ETF soon benefited in two ways: the banks bought up "fire sale" US assets and their P/E ratios became more realistic due to generalized panic.

There was another phenomenon; strong government intervention to stimulate the economy and avoid stagnation in the subsequent COVID panic. The buzzwords were "quantitative easing" and, after 2019, "CERB" in Canada. In both cases government injections found their way into the bank's and too many dollars are chasing too few goods and services.

Quenching Events Trigger Sector Rotation.
The Cdn energy industry and financials make up the bulk of TSE stocks. At the beginning of the latest the low P/E ratios of Canadian banks and insurance companies attracted brokers' attention. (Here the were out of equilibrium; earnings and dividends had been out-running price.) Here is the outcome for the XIU.TO ETF; when excess growth rate got quenched, money headed into these lagging sectors:

Inflation Conflation - Mushing Price and Money Supply Together.
There are two kinds of inflation, and they are different in kind. Most people assume that "inflation" means increase in the money supply. With their audience in mind, writers the future in terms of "printing presses".

Central Banks, however, view "inflation" as increase in $$$ paid to get goods/services vs. $$$ invested to produce them. Fortunately for them, the supply of labor has very low elasticity now, because of .

In other words the production of goods and services does not change much when prices rise. Demand, however, is much more elastic if disposable income is not available, prices drop accordingly. A small increase in interest rates will pull a LOT of money out of disposable income into servicing debt. Thus disposable income responds very strongly to rising interest rates.

In "Stagflation" times it was just the opposite - high interest rates suppressed supply of goods/services too much. Now it drives people work more to pay off their debts. That means investment in production is not as important as it was in the 1970s.

..0	20..1	20..2	20..3
20..4	20..5	20..6	20..7
20..8	20..9	20..A	20..B
20..C	20..D	20..E	This marks the destination for "Put it Back". (The current dividend data.) get Divs Destination: EPS data to check the slope vs. price chart. or EPS