How does Affinity gain investment perspective? 

We do so in a few, relatively simple ways.  While simple, this data provides a fairly comprehensive and sophisticated view.  While these tools help provide us with perspective, there are other more detailed analysis that we perform as well. 
 

Technical Analysis 

• the use of price-based statistics (indicators) to gauge the likely direction of on investment, etc. 
• this is Affinity’s main tool in making investment decisions 
• moving averages, such as the 200-day, are a simple example of technical indicators 
• for a more detailed description of this, see ITEM 8 of our ADV II
   

Morningstar’s Market Fair Value - Graph

• is the stock market under (below 1) or overvalued (above 1)? 
• provides guidance in when to be cautious (well above 1) and optimistic (well below 1) 
• at extremes – it is helpful in identifying potential for a turn in the market 
• provides historical context – the graph’s data goes back years 
   

Yardeni Research – YRI S&P 500 Earnings Forecast (Figure 6)

• provides annual S&P 500 (large US stocks) target levels for the current & two following years 
• helpful in developing expectations for short to intermediate-term return potential 
• classic valuation model based on projected earnings & the level of interest rates 
   

American Institute for Economic Research – (AIER) Leading Economic Indicators Index

• measures the likelihood of economic expansion or contraction 
• economic expansion 
  • more likely when the level is above 50 
  • stock markets tend to do well when this is the case 
• economic contraction 
  • more likely when the level is below 50 
  • stocks markets tend to do badly when this is the case​