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<span>Origin and use</span> </div> </a> <ul id="toc-Origin_and_use-sublist" class="vector-toc-list"> </ul> </li> <li id="toc-Supporting_arguments" class="vector-toc-list-item vector-toc-level-1 vector-toc-list-item-expanded"> <a class="vector-toc-link" href="#Supporting_arguments"> <div class="vector-toc-text"> <span class="vector-toc-numb">3</span> <span>Supporting arguments</span> </div> </a> <ul id="toc-Supporting_arguments-sublist" class="vector-toc-list"> </ul> </li> <li id="toc-Academic_analysis" class="vector-toc-list-item vector-toc-level-1 vector-toc-list-item-expanded"> <a class="vector-toc-link" href="#Academic_analysis"> <div class="vector-toc-text"> <span class="vector-toc-numb">4</span> <span>Academic analysis</span> </div> </a> <button aria-controls="toc-Academic_analysis-sublist" class="cdx-button cdx-button--weight-quiet cdx-button--icon-only vector-toc-toggle"> <span class="vector-icon mw-ui-icon-wikimedia-expand"></span> <span>Toggle Academic analysis subsection</span> </button> <ul id="toc-Academic_analysis-sublist" class="vector-toc-list"> <li id="toc-Lack_of_theoretical_support" class="vector-toc-list-item vector-toc-level-2"> <a class="vector-toc-link" href="#Lack_of_theoretical_support"> <div class="vector-toc-text"> <span class="vector-toc-numb">4.1</span> <span>Lack of theoretical support</span> </div> </a> <ul id="toc-Lack_of_theoretical_support-sublist" class="vector-toc-list"> </ul> </li> <li id="toc-Data_selection_and_international_markets" class="vector-toc-list-item vector-toc-level-2"> <a class="vector-toc-link" href="#Data_selection_and_international_markets"> <div class="vector-toc-text"> <span class="vector-toc-numb">4.2</span> <span>Data selection and international markets</span> </div> </a> <ul id="toc-Data_selection_and_international_markets-sublist" class="vector-toc-list"> </ul> </li> <li id="toc-Lack_of_predictive_power" class="vector-toc-list-item vector-toc-level-2"> <a class="vector-toc-link" href="#Lack_of_predictive_power"> <div class="vector-toc-text"> <span class="vector-toc-numb">4.3</span> <span>Lack of predictive power</span> </div> </a> <ul id="toc-Lack_of_predictive_power-sublist" class="vector-toc-list"> </ul> </li> <li id="toc-Breakdown_at_very_low_interest_rates" class="vector-toc-list-item vector-toc-level-2"> <a class="vector-toc-link" href="#Breakdown_at_very_low_interest_rates"> <div class="vector-toc-text"> <span class="vector-toc-numb">4.4</span> <span>Breakdown at very low interest rates</span> </div> </a> <ul id="toc-Breakdown_at_very_low_interest_rates-sublist" class="vector-toc-list"> </ul> </li> </ul> </li> <li id="toc-Impact_of_Fed_put" class="vector-toc-list-item vector-toc-level-1 vector-toc-list-item-expanded"> <a class="vector-toc-link" href="#Impact_of_Fed_put"> <div class="vector-toc-text"> <span class="vector-toc-numb">5</span> <span>Impact of Fed put</span> </div> </a> <ul id="toc-Impact_of_Fed_put-sublist" class="vector-toc-list"> </ul> </li> <li id="toc-See_also" class="vector-toc-list-item vector-toc-level-1 vector-toc-list-item-expanded"> <a class="vector-toc-link" href="#See_also"> <div class="vector-toc-text"> <span class="vector-toc-numb">6</span> <span>See also</span> </div> </a> <ul id="toc-See_also-sublist" class="vector-toc-list"> </ul> </li> <li id="toc-References" class="vector-toc-list-item vector-toc-level-1 vector-toc-list-item-expanded"> <a class="vector-toc-link" href="#References"> <div class="vector-toc-text"> <span class="vector-toc-numb">7</span> <span>References</span> </div> </a> <button aria-controls="toc-References-sublist" class="cdx-button cdx-button--weight-quiet cdx-button--icon-only vector-toc-toggle"> <span class="vector-icon mw-ui-icon-wikimedia-expand"></span> <span>Toggle References subsection</span> </button> <ul id="toc-References-sublist" class="vector-toc-list"> <li id="toc-Further_reading" class="vector-toc-list-item vector-toc-level-2"> <a class="vector-toc-link" href="#Further_reading"> <div class="vector-toc-text"> <span class="vector-toc-numb">7.1</span> <span>Further reading</span> </div> </a> <ul id="toc-Further_reading-sublist" class="vector-toc-list"> </ul> </li> </ul> </li> <li id="toc-External_links" class="vector-toc-list-item vector-toc-level-1 vector-toc-list-item-expanded"> <a class="vector-toc-link" href="#External_links"> <div class="vector-toc-text"> <span class="vector-toc-numb">8</span> <span>External links</span> </div> </a> <ul id="toc-External_links-sublist" class="vector-toc-list"> </ul> </li> </ul> </div> </div> </nav> </div> </div> <div class="mw-content-container"> <main id="content" class="mw-body"> <header class="mw-body-header vector-page-titlebar"> <nav aria-label="Contents" class="vector-toc-landmark"> <div id="vector-page-titlebar-toc" class="vector-dropdown vector-page-titlebar-toc vector-button-flush-left" > <input type="checkbox" id="vector-page-titlebar-toc-checkbox" role="button" aria-haspopup="true" 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class="noprint">From Wikipedia, the free encyclopedia</div> </div> <div id="contentSub"><div id="mw-content-subtitle"></div></div> <div id="mw-content-text" class="mw-body-content"><div class="mw-content-ltr mw-parser-output" lang="en" dir="ltr"><div class="shortdescription nomobile noexcerpt noprint searchaux" style="display:none">Disputed equity valuation model</div> <figure class="mw-halign-right" typeof="mw:File/Thumb"><a href="/wiki/File:S_and_P_500_pe_ratio_to_mid2012.png" class="mw-file-description"><img src="//upload.wikimedia.org/wikipedia/commons/thumb/d/d0/S_and_P_500_pe_ratio_to_mid2012.png/320px-S_and_P_500_pe_ratio_to_mid2012.png" decoding="async" width="320" height="188" class="mw-file-element" srcset="//upload.wikimedia.org/wikipedia/commons/thumb/d/d0/S_and_P_500_pe_ratio_to_mid2012.png/480px-S_and_P_500_pe_ratio_to_mid2012.png 1.5x, //upload.wikimedia.org/wikipedia/commons/thumb/d/d0/S_and_P_500_pe_ratio_to_mid2012.png/640px-S_and_P_500_pe_ratio_to_mid2012.png 2x" data-file-width="894" data-file-height="524" /></a><figcaption><a href="/wiki/Robert_Shiller" class="mw-redirect" title="Robert Shiller">Robert Shiller</a>'s plot of the <a href="/wiki/S%26P_500_Index" class="mw-redirect" title="S&P 500 Index">S&P 500</a> <a href="/wiki/Price%E2%80%93earnings" class="mw-redirect" title="Price–earnings">price–earnings</a> ratio (P/E) versus long-term Treasury yields (1871–2012), from <i><a href="/wiki/Irrational_Exuberance_(book)" title="Irrational Exuberance (book)">Irrational Exuberance</a></i>.<sup id="cite_ref-IE2_1-0" class="reference"><a href="#cite_note-IE2-1"><span class="cite-bracket">[</span>1<span class="cite-bracket">]</span></a></sup><br />The P/E ratio is the inverse of the E/P ratio, and from 1921 to 1928 and 1987 to 2000, supports the Fed model (i.e. P/E ratio moves inversely to the treasury yield), however, for all other periods, the relationship of the Fed model fails;<sup id="cite_ref-EC2_2-0" class="reference"><a href="#cite_note-EC2-2"><span class="cite-bracket">[</span>2<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-EYa_3-0" class="reference"><a href="#cite_note-EYa-3"><span class="cite-bracket">[</span>3<span class="cite-bracket">]</span></a></sup> even up to 2019.<sup id="cite_ref-ED_4-0" class="reference"><a href="#cite_note-ED-4"><span class="cite-bracket">[</span>4<span class="cite-bracket">]</span></a></sup></figcaption></figure> <p>The "<b>Fed model</b>", or "<b>Fed Stock Valuation Model</b>" (FSVM), is a disputed <a href="/wiki/Theory" title="Theory">theory</a> of <a href="/wiki/Equity_valuation" class="mw-redirect" title="Equity valuation">equity valuation</a> that compares the <a href="/wiki/Stock_market" title="Stock market">stock market</a>'s forward <a href="/wiki/Earnings_yield" title="Earnings yield">earnings yield</a> to the <a href="/wiki/Nominal_interest_rate" title="Nominal interest rate">nominal yield</a> on long-term <a href="/wiki/Government_bonds" class="mw-redirect" title="Government bonds">government bonds</a>, and that the stock market – as a whole – is fairly valued, when the one-year forward-looking <a href="/wiki/I/B/E/S" class="mw-redirect" title="I/B/E/S">I/B/E/S</a> <a href="/wiki/Earnings_yield" title="Earnings yield">earnings yield</a> equals the 10-year nominal Treasury yield; deviations suggest over-or-under valuation.<sup id="cite_ref-Econ1_5-0" class="reference"><a href="#cite_note-Econ1-5"><span class="cite-bracket">[</span>5<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-Estrada2009_6-0" class="reference"><a href="#cite_note-Estrada2009-6"><span class="cite-bracket">[</span>6<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-Barrons_7-0" class="reference"><a href="#cite_note-Barrons-7"><span class="cite-bracket">[</span>7<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-FT3_8-0" class="reference"><a href="#cite_note-FT3-8"><span class="cite-bracket">[</span>8<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-MH4_9-0" class="reference"><a href="#cite_note-MH4-9"><span class="cite-bracket">[</span>9<span class="cite-bracket">]</span></a></sup> </p><p>The relationship has only held in the United States, and only for two main periods: 1921 to 1928 and from 1987 to 2000.<sup id="cite_ref-EC2_2-1" class="reference"><a href="#cite_note-EC2-2"><span class="cite-bracket">[</span>2<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-ED_4-1" class="reference"><a href="#cite_note-ED-4"><span class="cite-bracket">[</span>4<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-Estrada2009_6-1" class="reference"><a href="#cite_note-Estrada2009-6"><span class="cite-bracket">[</span>6<span class="cite-bracket">]</span></a></sup> It has been shown to be flawed on a theoretical basis,<sup id="cite_ref-FT3_8-1" class="reference"><a href="#cite_note-FT3-8"><span class="cite-bracket">[</span>8<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-Estrada_10-0" class="reference"><a href="#cite_note-Estrada-10"><span class="cite-bracket">[</span>10<span class="cite-bracket">]</span></a></sup> fails to hold in long-term analysis of data (both in the United States, and international markets),<sup id="cite_ref-Estrada2009_6-2" class="reference"><a href="#cite_note-Estrada2009-6"><span class="cite-bracket">[</span>6<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-FT3_8-2" class="reference"><a href="#cite_note-FT3-8"><span class="cite-bracket">[</span>8<span class="cite-bracket">]</span></a></sup> and has poor predictive power for future returns on a 1, 5 and 10-year basis.<sup id="cite_ref-FT3_8-3" class="reference"><a href="#cite_note-FT3-8"><span class="cite-bracket">[</span>8<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-Asness_11-0" class="reference"><a href="#cite_note-Asness-11"><span class="cite-bracket">[</span>11<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-MH2_12-0" class="reference"><a href="#cite_note-MH2-12"><span class="cite-bracket">[</span>12<span class="cite-bracket">]</span></a></sup> The relationship can breakdown completely at very low <a href="/wiki/Real_interest_rate" title="Real interest rate">real yields</a> (from natural forces, or where yields are artificially suppressed by <a href="/wiki/Quantitative_easing" title="Quantitative easing">quantitative easing</a>);<sup id="cite_ref-JAM1_13-0" class="reference"><a href="#cite_note-JAM1-13"><span class="cite-bracket">[</span>13<span class="cite-bracket">]</span></a></sup> in such circumstances, without additional central bank support for the stock market (e.g. use of the <a href="/wiki/Greenspan_put" title="Greenspan put">Greenspan put</a> by the Fed in 2020, or the <a href="/wiki/Bank_of_Japan" title="Bank of Japan">Bank of Japan</a>'s purchase of equities post-2013), the relationship collapses.<sup id="cite_ref-EC2_2-2" class="reference"><a href="#cite_note-EC2-2"><span class="cite-bracket">[</span>2<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-Koo1_14-0" class="reference"><a href="#cite_note-Koo1-14"><span class="cite-bracket">[</span>14<span class="cite-bracket">]</span></a></sup> </p><p>The Fed model is used by Wall Street sales desks as it almost always gives a "buy signal", and has rarely signaled stocks are overvalued.<sup id="cite_ref-MH_15-0" class="reference"><a href="#cite_note-MH-15"><span class="cite-bracket">[</span>15<span class="cite-bracket">]</span></a></sup> Some academics say the relationship, when it appears, is driven by the allocation of the Fed's balance sheet to Wall Street banks via <a href="/wiki/Repurchase_agreements" class="mw-redirect" title="Repurchase agreements">repurchase agreements</a> as part of <a href="/wiki/Fed_put" class="mw-redirect" title="Fed put">Fed put</a> stimulus (i.e. the relationship reflects the investment strategy these banks follow using borrowed Fed funds when the Fed is stimulating asset prices, e.g. Wall Street banks lending to <a href="/wiki/Long-Term_Capital_Management" title="Long-Term Capital Management">Long-Term Capital Management</a>-type vehicles being a noted example<sup id="cite_ref-FT12_16-0" class="reference"><a href="#cite_note-FT12-16"><span class="cite-bracket">[</span>16<span class="cite-bracket">]</span></a></sup>).<sup id="cite_ref-FM1_17-0" class="reference"><a href="#cite_note-FM1-17"><span class="cite-bracket">[</span>17<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-Stig_18-0" class="reference"><a href="#cite_note-Stig-18"><span class="cite-bracket">[</span>18<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-BK3_19-0" class="reference"><a href="#cite_note-BK3-19"><span class="cite-bracket">[</span>19<span class="cite-bracket">]</span></a></sup> </p><p>The term was coined in 1997–99 by Deutsche Bank analyst Dr. Edward Yardeni commenting on a report on the July 1997 Humphrey-Hawkins testimony by the then-Fed Chair, <a href="/wiki/Alan_Greenspan" title="Alan Greenspan">Alan Greenspan</a> on equity valuations.<sup id="cite_ref-EC2_2-3" class="reference"><a href="#cite_note-EC2-2"><span class="cite-bracket">[</span>2<span class="cite-bracket">]</span></a></sup> In 2014, Yardeni noted that the predictive power of the Fed model stopped working almost as soon as he noted the relationship.<sup id="cite_ref-EYa_3-1" class="reference"><a href="#cite_note-EYa-3"><span class="cite-bracket">[</span>3<span class="cite-bracket">]</span></a></sup> The term was never formally endorsed by the Fed,<sup id="cite_ref-MH_15-1" class="reference"><a href="#cite_note-MH-15"><span class="cite-bracket">[</span>15<span class="cite-bracket">]</span></a></sup> however, Greenspan made further references to the relationship.<sup id="cite_ref-AG_20-0" class="reference"><a href="#cite_note-AG-20"><span class="cite-bracket">[</span>20<span class="cite-bracket">]</span></a></sup> In December 2020, the Fed Chair <a href="/wiki/Jerome_Powell" title="Jerome Powell">Jerome Powell</a>, invoked the relationship to justify stock market valuations that were approaching levels not seen since the 1999–2000 <a href="/wiki/Dot-com_bubble" title="Dot-com bubble">Dot-com bubble</a> or the <a href="/wiki/Wall_Street_Crash_of_1929" class="mw-redirect" title="Wall Street Crash of 1929">1929 market bubble</a>,<sup id="cite_ref-Hill2_21-0" class="reference"><a href="#cite_note-Hill2-21"><span class="cite-bracket">[</span>21<span class="cite-bracket">]</span></a></sup> due to exceptional monetary looseness by the Fed.<sup id="cite_ref-Bloomberg1_22-0" class="reference"><a href="#cite_note-Bloomberg1-22"><span class="cite-bracket">[</span>22<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-WSJ4_23-0" class="reference"><a href="#cite_note-WSJ4-23"><span class="cite-bracket">[</span>23<span class="cite-bracket">]</span></a></sup> </p> <meta property="mw:PageProp/toc" /> <div class="mw-heading mw-heading2"><h2 id="Formula">Formula</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Fed_model&action=edit&section=1" title="Edit section: Formula"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p>The Fed model compares the one-year forward-looking <a href="/wiki/I/B/E/S" class="mw-redirect" title="I/B/E/S">I/B/E/S</a> <a href="/wiki/Earnings_yield" title="Earnings yield">earnings yield</a> <span class="mwe-math-element"><span class="mwe-math-mathml-inline mwe-math-mathml-a11y" style="display: none;"><math xmlns="http://www.w3.org/1998/Math/MathML" alttext="{\displaystyle ({\frac {E}{P}})}"> <semantics> <mrow class="MJX-TeXAtom-ORD"> <mstyle displaystyle="true" scriptlevel="0"> <mo stretchy="false">(</mo> <mrow class="MJX-TeXAtom-ORD"> <mfrac> <mi>E</mi> <mi>P</mi> </mfrac> </mrow> <mo stretchy="false">)</mo> </mstyle> </mrow> <annotation encoding="application/x-tex">{\displaystyle ({\frac {E}{P}})}</annotation> </semantics> </math></span><img src="https://wikimedia.org/api/rest_v1/media/math/render/svg/eb4339ce0033ed2f903f137adc326cfa4904b296" class="mwe-math-fallback-image-inline mw-invert skin-invert" aria-hidden="true" style="vertical-align: -1.838ex; width:4.421ex; height:5.176ex;" alt="{\displaystyle ({\frac {E}{P}})}"></span> on the <a href="/wiki/S%26P_500_Index" class="mw-redirect" title="S&P 500 Index">S&P 500 Index</a> to the nominal 10-year US Treasury note yield, <span class="mwe-math-element"><span class="mwe-math-mathml-inline mwe-math-mathml-a11y" style="display: none;"><math xmlns="http://www.w3.org/1998/Math/MathML" alttext="{\displaystyle (Y_{\text{10}})}"> <semantics> <mrow class="MJX-TeXAtom-ORD"> <mstyle displaystyle="true" scriptlevel="0"> <mo stretchy="false">(</mo> <msub> <mi>Y</mi> <mrow class="MJX-TeXAtom-ORD"> <mtext>10</mtext> </mrow> </msub> <mo stretchy="false">)</mo> </mstyle> </mrow> <annotation encoding="application/x-tex">{\displaystyle (Y_{\text{10}})}</annotation> </semantics> </math></span><img src="https://wikimedia.org/api/rest_v1/media/math/render/svg/2e9d3ecbcae74955be34898ddd0b5a735ca1df89" class="mwe-math-fallback-image-inline mw-invert skin-invert" aria-hidden="true" style="vertical-align: -0.838ex; width:5.036ex; height:2.843ex;" alt="{\displaystyle (Y_{\text{10}})}"></span>.<sup id="cite_ref-Estrada_10-1" class="reference"><a href="#cite_note-Estrada-10"><span class="cite-bracket">[</span>10<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-ed1_24-0" class="reference"><a href="#cite_note-ed1-24"><span class="cite-bracket">[</span>24<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-ed2_25-0" class="reference"><a href="#cite_note-ed2-25"><span class="cite-bracket">[</span>25<span class="cite-bracket">]</span></a></sup> </p> <dl><dd><span class="mwe-math-element"><span class="mwe-math-mathml-inline mwe-math-mathml-a11y" style="display: none;"><math xmlns="http://www.w3.org/1998/Math/MathML" alttext="{\displaystyle {\frac {E}{P}}=Y_{\text{10}}}"> <semantics> <mrow class="MJX-TeXAtom-ORD"> <mstyle displaystyle="true" scriptlevel="0"> <mrow class="MJX-TeXAtom-ORD"> <mfrac> <mi>E</mi> <mi>P</mi> </mfrac> </mrow> <mo>=</mo> <msub> <mi>Y</mi> <mrow class="MJX-TeXAtom-ORD"> <mtext>10</mtext> </mrow> </msub> </mstyle> </mrow> <annotation encoding="application/x-tex">{\displaystyle {\frac {E}{P}}=Y_{\text{10}}}</annotation> </semantics> </math></span><img src="https://wikimedia.org/api/rest_v1/media/math/render/svg/58bb71e570f0190e39295ae67e35ed8a6cae0e93" class="mwe-math-fallback-image-inline mw-invert skin-invert" aria-hidden="true" style="vertical-align: -1.838ex; width:8.937ex; height:5.176ex;" alt="{\displaystyle {\frac {E}{P}}=Y_{\text{10}}}"></span>, means the stock market, in aggregate, is fairly valued.<sup id="cite_ref-Estrada_10-2" class="reference"><a href="#cite_note-Estrada-10"><span class="cite-bracket">[</span>10<span class="cite-bracket">]</span></a></sup></dd></dl> <dl><dd><span class="mwe-math-element"><span class="mwe-math-mathml-inline mwe-math-mathml-a11y" style="display: none;"><math xmlns="http://www.w3.org/1998/Math/MathML" alttext="{\displaystyle {\frac {E}{P}}<Y_{\text{10}}}"> <semantics> <mrow class="MJX-TeXAtom-ORD"> <mstyle displaystyle="true" scriptlevel="0"> <mrow class="MJX-TeXAtom-ORD"> <mfrac> <mi>E</mi> <mi>P</mi> </mfrac> </mrow> <mo><</mo> <msub> <mi>Y</mi> <mrow class="MJX-TeXAtom-ORD"> <mtext>10</mtext> </mrow> </msub> </mstyle> </mrow> <annotation encoding="application/x-tex">{\displaystyle {\frac {E}{P}}<Y_{\text{10}}}</annotation> </semantics> </math></span><img src="https://wikimedia.org/api/rest_v1/media/math/render/svg/73bb9f442b4c368ee3c3dcf2f85a037b5627956a" class="mwe-math-fallback-image-inline mw-invert skin-invert" aria-hidden="true" style="vertical-align: -1.838ex; width:8.937ex; height:5.176ex;" alt="{\displaystyle {\frac {E}{P}}<Y_{\text{10}}}"></span>, means the stock market, in aggregate, is over valued.<sup id="cite_ref-Estrada_10-3" class="reference"><a href="#cite_note-Estrada-10"><span class="cite-bracket">[</span>10<span class="cite-bracket">]</span></a></sup></dd></dl> <dl><dd><span class="mwe-math-element"><span class="mwe-math-mathml-inline mwe-math-mathml-a11y" style="display: none;"><math xmlns="http://www.w3.org/1998/Math/MathML" alttext="{\displaystyle {\frac {E}{P}}>Y_{\text{10}}}"> <semantics> <mrow class="MJX-TeXAtom-ORD"> <mstyle displaystyle="true" scriptlevel="0"> <mrow class="MJX-TeXAtom-ORD"> <mfrac> <mi>E</mi> <mi>P</mi> </mfrac> </mrow> <mo>></mo> <msub> <mi>Y</mi> <mrow class="MJX-TeXAtom-ORD"> <mtext>10</mtext> </mrow> </msub> </mstyle> </mrow> <annotation encoding="application/x-tex">{\displaystyle {\frac {E}{P}}>Y_{\text{10}}}</annotation> </semantics> </math></span><img src="https://wikimedia.org/api/rest_v1/media/math/render/svg/5162f0c95425668e21923a183ec406dbbfad335e" class="mwe-math-fallback-image-inline mw-invert skin-invert" aria-hidden="true" style="vertical-align: -1.838ex; width:8.937ex; height:5.176ex;" alt="{\displaystyle {\frac {E}{P}}>Y_{\text{10}}}"></span>, means the stock market, in aggregate, is undervalued.<sup id="cite_ref-Estrada_10-4" class="reference"><a href="#cite_note-Estrada-10"><span class="cite-bracket">[</span>10<span class="cite-bracket">]</span></a></sup></dd></dl> <p>The Fed model only applies to the aggregate stock market valuation (i.e. the total S&P500), and is not applied to individual stock valuation.<sup id="cite_ref-ed1_24-1" class="reference"><a href="#cite_note-ed1-24"><span class="cite-bracket">[</span>24<span class="cite-bracket">]</span></a></sup> </p><p>While the Fed model was specifically named for the United States stock market, it can be applied to any other stock market.<sup id="cite_ref-Estrada_10-5" class="reference"><a href="#cite_note-Estrada-10"><span class="cite-bracket">[</span>10<span class="cite-bracket">]</span></a></sup> </p> <div class="mw-heading mw-heading2"><h2 id="Origin_and_use">Origin and use</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Fed_model&action=edit&section=2" title="Edit section: Origin and use"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <figure class="mw-default-size mw-halign-right" typeof="mw:File/Thumb"><a href="/wiki/File:Epr797.gif" class="mw-file-description"><img alt="test1" src="//upload.wikimedia.org/wikipedia/commons/thumb/2/27/Epr797.gif/240px-Epr797.gif" decoding="async" width="240" height="253" class="mw-file-element" srcset="//upload.wikimedia.org/wikipedia/commons/2/27/Epr797.gif 1.5x" data-file-width="287" data-file-height="302" /></a><figcaption>Original graphic from Humphrey-Hawkins report of 22 July 1997</figcaption></figure> <p>The term "Fed model", or "Fed Stock Valuation Model" (FSVM), was coined in a series of reports from 1997 to 1999 by Deutsche Morgan Grenfell analyst Dr. Ed Yardeni.<sup id="cite_ref-Econ1_5-1" class="reference"><a href="#cite_note-Econ1-5"><span class="cite-bracket">[</span>5<span class="cite-bracket">]</span></a></sup> Yardeni noted that the then-Fed Chair <a href="/wiki/Alan_Greenspan" title="Alan Greenspan">Alan Greenspan</a>, seemed to use the relationship between the forward earnings yield on the <a href="/wiki/S%26P_500_Index" class="mw-redirect" title="S&P 500 Index">S&P 500 Index</a> and the 10-year Treasury yield in assessing levels of equity market over-or-under valuation. Yardeni quoted a paragraph and graphic (see image opposite), from the Fed's July 1997 <a href="/wiki/Monetary_Policy_Report_to_the_Congress" title="Monetary Policy Report to the Congress">Monetary Policy Report to the Congress</a>, which implied Greenspan was using the model to express concerns about market overvaluation, with Yardeni saying: "He [Greenspan] probably instructed his staff to devise a stock market valuation model to help him evaluate the extent of this <a href="/wiki/Irrational_exuberance" title="Irrational exuberance">irrational exuberance</a>":<sup id="cite_ref-ed1_24-2" class="reference"><a href="#cite_note-ed1-24"><span class="cite-bracket">[</span>24<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-ed2_25-1" class="reference"><a href="#cite_note-ed2-25"><span class="cite-bracket">[</span>25<span class="cite-bracket">]</span></a></sup> </p> <style data-mw-deduplicate="TemplateStyles:r1244412712">.mw-parser-output .templatequote{overflow:hidden;margin:1em 0;padding:0 32px}.mw-parser-output .templatequotecite{line-height:1.5em;text-align:left;margin-top:0}@media(min-width:500px){.mw-parser-output .templatequotecite{padding-left:1.6em}}</style><blockquote class="templatequote"><p>…changes in this ratio [P/E of the S&P 500 index] have often been inversely related to changes in the long-term Treasury yields, but this year's stock price gains were not matched by a significant net decline in interest rates. As a result, the yield on ten-year Treasury notes now exceeds the ratio of twelve-month-ahead earnings to prices by the largest amount since 1991, when earnings were depressed by the economic slowdown.</p><div class="templatequotecite">— <cite>Federal Reserve <a href="/wiki/Humphrey%E2%80%93Hawkins_Full_Employment_Act" title="Humphrey–Hawkins Full Employment Act">Humphrey Hawkins</a> report (22 July 1997).<sup id="cite_ref-Estrada_10-6" class="reference"><a href="#cite_note-Estrada-10"><span class="cite-bracket">[</span>10<span class="cite-bracket">]</span></a></sup></cite></div></blockquote> <p>Academics note that <a href="/wiki/I/B/E/S" class="mw-redirect" title="I/B/E/S">I/B/E/S</a> published a similar metric since 1986 called the <b>I/B/E/S Equity Valuation Model</b>, and that the concept was in widespread use by Wall Street with <a href="/wiki/Javier_Estrada_(professor)" title="Javier Estrada (professor)">Estrada</a> noting: "Any statement that justifies high P/E ratios with the existence of prevailing low-interest rates is essentially using the Fed model".<sup id="cite_ref-Estrada_10-7" class="reference"><a href="#cite_note-Estrada-10"><span class="cite-bracket">[</span>10<span class="cite-bracket">]</span></a></sup> </p><p>The "Fed model" was never officially endorsed as a metric by the Fed, but Greenspan referenced the relationship several times including in his 2007 memoirs, saying: "The decline of real (inflation-adjusted) long-term interest rates that has occurred in the last two decades has been associated with rising price-to-earnings ratios for stocks, real estate, and in fact all income-earnings assets".<sup id="cite_ref-AG_20-1" class="reference"><a href="#cite_note-AG-20"><span class="cite-bracket">[</span>20<span class="cite-bracket">]</span></a></sup> </p><p>In December 2020, Fed Chair <a href="/wiki/Jerome_Powell" title="Jerome Powell">Jerome Powell</a>, invoked the "Fed Model" to justify high stock market price-earnings ratios (then approaching levels of the <a href="/wiki/Dot-com_bubble" title="Dot-com bubble">Dot-com bubble</a>, in a period called the <a href="/wiki/Everything_bubble" title="Everything bubble">everything bubble</a>),<sup id="cite_ref-Hill2_21-1" class="reference"><a href="#cite_note-Hill2-21"><span class="cite-bracket">[</span>21<span class="cite-bracket">]</span></a></sup> saying: "If you look at P/Es they're historically high, but in a world where the risk-free rate is going to be low for a sustained period, the equity premium, which is really the reward you get for taking equity risk, would be what you'd look at".<sup id="cite_ref-Bloomberg1_22-1" class="reference"><a href="#cite_note-Bloomberg1-22"><span class="cite-bracket">[</span>22<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-26" class="reference"><a href="#cite_note-26"><span class="cite-bracket">[</span>26<span class="cite-bracket">]</span></a></sup> Yardeni said Powell's actions in 2020, countering the financial effects of the <a href="/wiki/COVID-19_pandemic" title="COVID-19 pandemic">COVID-19 pandemic</a>, could form the greatest financial bubble in history.<sup id="cite_ref-27" class="reference"><a href="#cite_note-27"><span class="cite-bracket">[</span>27<span class="cite-bracket">]</span></a></sup> </p> <link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1244412712"><blockquote class="templatequote"><p>The Fed model is often cited by equity strategists and economists to justify lofty equity valuations. It's not too often that a Fed chair engages in that exercise.</p><div class="templatequotecite">— <cite><i><a href="/wiki/Bloomberg_News" title="Bloomberg News">Bloomberg</a></i> (December 2020)<sup id="cite_ref-28" class="reference"><a href="#cite_note-28"><span class="cite-bracket">[</span>28<span class="cite-bracket">]</span></a></sup></cite></div></blockquote> <p>In February 2021, <i>The Wall Street Journal</i> noted that stock valuations were in a bubble on almost every metric except for that of the Fed Model (i.e. 10-year Treasury yields), which the WSJ felt Powell was using as a guide on how far his policy of extreme stimulus/monetary looseness could be used to push stock prices higher.<sup id="cite_ref-WSJ4_23-1" class="reference"><a href="#cite_note-WSJ4-23"><span class="cite-bracket">[</span>23<span class="cite-bracket">]</span></a></sup> </p> <div class="mw-heading mw-heading2"><h2 id="Supporting_arguments">Supporting arguments</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Fed_model&action=edit&section=3" title="Edit section: Supporting arguments"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p>A number of arguments are listed in favor of the Fed model, the three most important of which are:<sup id="cite_ref-Estrada_10-8" class="reference"><a href="#cite_note-Estrada-10"><span class="cite-bracket">[</span>10<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-SOA_29-0" class="reference"><a href="#cite_note-SOA-29"><span class="cite-bracket">[</span>29<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-Econ1_5-2" class="reference"><a href="#cite_note-Econ1-5"><span class="cite-bracket">[</span>5<span class="cite-bracket">]</span></a></sup> </p> <ul><li>Competing assets argument. Stocks and bonds are competing asset classes for investors. When stocks yield more than bonds, investors are better off investing in stocks. When funds flow from bonds into stocks on a large scale, the yield on bonds should increase and the yield on stocks decreases until the Fed model equilibrium is reached.<sup id="cite_ref-Barrons_7-1" class="reference"><a href="#cite_note-Barrons-7"><span class="cite-bracket">[</span>7<span class="cite-bracket">]</span></a></sup> In a 2003 paper, <a href="/wiki/Cliff_Asness" title="Cliff Asness">Cliff Asness</a> argued that investors do set stock market P/Es (inverse of E/P) based on nominal interest rates, but that they do so in error. By confusing real and nominal, investors suffer from "money illusion".<sup id="cite_ref-Asness_11-1" class="reference"><a href="#cite_note-Asness-11"><span class="cite-bracket">[</span>11<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-SOA_29-1" class="reference"><a href="#cite_note-SOA-29"><span class="cite-bracket">[</span>29<span class="cite-bracket">]</span></a></sup> Other academic research indicates some support for the competing assets argument, but that the driver is due to "habit-based risk aversion", which could be linked to the use of the Fed put (see below).<sup id="cite_ref-FM1_17-1" class="reference"><a href="#cite_note-FM1-17"><span class="cite-bracket">[</span>17<span class="cite-bracket">]</span></a></sup> <i><a href="/wiki/The_Wall_Street_Journal" title="The Wall Street Journal">The Wall Street Journal</a></i> noted that the model's use of 1-year forward earnings makes it a favourite of Wall Street analysts whose earnings estimates are "... permanently bullish, thus always making stocks look cheap versus [Treasury] yields".<sup id="cite_ref-30" class="reference"><a href="#cite_note-30"><span class="cite-bracket">[</span>30<span class="cite-bracket">]</span></a></sup> In 2020, finance author <a href="/wiki/Mark_Hulbert" title="Mark Hulbert">Mark Hulbert</a>, in demonstrating the poor statistical performance of the model, also emphasized that the competing assets argument is really a "Wall Street sales line":<sup id="cite_ref-MH_15-2" class="reference"><a href="#cite_note-MH-15"><span class="cite-bracket">[</span>15<span class="cite-bracket">]</span></a></sup></li></ul> <link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1244412712"><blockquote class="templatequote"><p>The Fed Model's attraction to the Wall Street bulls is that it almost always is bullish.</p><div class="templatequotecite">— <cite><a href="/wiki/Mark_Hulbert" title="Mark Hulbert">Mark Hulbert</a> (June 2020)<sup id="cite_ref-MH_15-3" class="reference"><a href="#cite_note-MH-15"><span class="cite-bracket">[</span>15<span class="cite-bracket">]</span></a></sup></cite></div></blockquote> <ul><li>Present value argument. The value of stocks should be equal to the sum of its <a href="/wiki/Discounted" class="mw-redirect" title="Discounted">discounted</a> future cash flows, being the present value. The government bond rate can be seen as a proxy for the risk-free rate. Thus, when the government bond rate falls, the discount rate falls, and the present value rises. And this implies that when interest rates fall, E/P also falls. Academics consider this a flawed argument as it doesn't take into account why the bond yields fell,<sup id="cite_ref-Estrada_10-9" class="reference"><a href="#cite_note-Estrada-10"><span class="cite-bracket">[</span>10<span class="cite-bracket">]</span></a></sup> with Asness adding: "It is absolutely true that, all else being equal, a falling discount rate raises the current price. All else is not equal, though. If when inflation declines, future nominal cash flow from equities also falls, this can offset the effect of lower discount rates. Lower discount rates are applied to lower expected cash flows".<sup id="cite_ref-Asness_11-2" class="reference"><a href="#cite_note-Asness-11"><span class="cite-bracket">[</span>11<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-EC2_2-4" class="reference"><a href="#cite_note-EC2-2"><span class="cite-bracket">[</span>2<span class="cite-bracket">]</span></a></sup> In 2020, when then-Fed Chair Jerome Powell used the present value argument to justify high P/E multiples, <i>The Wall Street Journal</i> described Powell's comparison as an attempt to "rewrite the laws of investing".<sup id="cite_ref-31" class="reference"><a href="#cite_note-31"><span class="cite-bracket">[</span>31<span class="cite-bracket">]</span></a></sup></li></ul> <dl><dd>A larger example of Asness' point was post-1990 Japan when the collapse of the Japanese asset bubble saw the earnings yield of the Nikkei rise materially for several decades while Japanese Government bond yields collapsed to almost zero; only when the <a href="/wiki/Bank_of_Japan" title="Bank of Japan">Bank of Japan</a> started directly buying large of equities from 2013 onwards (i.e. forcing the earnings yield down), did the Fed model begin to reapply.<sup id="cite_ref-Koo1_14-1" class="reference"><a href="#cite_note-Koo1-14"><span class="cite-bracket">[</span>14<span class="cite-bracket">]</span></a></sup></dd></dl> <ul><li>Historical data argument. For a specific period in the United States from 1995 to 2000, the correlation between the forward earnings yield and the 10-year Treasury yield was estimated at 75 percent.<sup id="cite_ref-Salomons_32-0" class="reference"><a href="#cite_note-Salomons-32"><span class="cite-bracket">[</span>32<span class="cite-bracket">]</span></a></sup> However, over the 1881–2002 period the correlation was only 19 percent, and post 2002, the correlation has been weaker, with long periods of complete divergence.<sup id="cite_ref-EC2_2-5" class="reference"><a href="#cite_note-EC2-2"><span class="cite-bracket">[</span>2<span class="cite-bracket">]</span></a></sup> Academics show that outside of the United States, the evidence for a Fed model is weak,<sup id="cite_ref-Estrada_10-10" class="reference"><a href="#cite_note-Estrada-10"><span class="cite-bracket">[</span>10<span class="cite-bracket">]</span></a></sup> with academics wondering if the existence of periods when the Fed model does apply in the United States, is really due to specific unseen or misunderstood actions by the Fed via Wall Street investment banks on asset prices (i.e. the <a href="/wiki/Greenspan_put" title="Greenspan put">Greenspan put</a>),<sup id="cite_ref-FM1_17-2" class="reference"><a href="#cite_note-FM1-17"><span class="cite-bracket">[</span>17<span class="cite-bracket">]</span></a></sup> or even a mistaken understanding by investors of such Fed actions.<sup id="cite_ref-Econ1_5-3" class="reference"><a href="#cite_note-Econ1-5"><span class="cite-bracket">[</span>5<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-Asness_11-3" class="reference"><a href="#cite_note-Asness-11"><span class="cite-bracket">[</span>11<span class="cite-bracket">]</span></a></sup> After the Fed model's relationship broke down post-2000, <i>Bloomberg</i> wrote in 2017 of the connection between the relationship and the understanding of the Fed's stimulus of the markets that, "Wall Street likes to play up the Federal Reserve's role in boosting the market, but by one popular gauge at least the Fed's influence on stocks seems to be diminished".<sup id="cite_ref-33" class="reference"><a href="#cite_note-33"><span class="cite-bracket">[</span>33<span class="cite-bracket">]</span></a></sup></li></ul> <div class="mw-heading mw-heading2"><h2 id="Academic_analysis">Academic analysis</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Fed_model&action=edit&section=4" title="Edit section: Academic analysis"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p>Academics conclude that the model is inconsistent with a rational valuation of the stock market, or past long-term observations, and has little predictive forecasting power. In addition, the Fed model only seems to apply for specific periods in the United States, while international markets have shown weak evidence with long period of dramatic divergences (e.g. Japan post-1990, US post dot-com burst).<sup id="cite_ref-Estrada_10-11" class="reference"><a href="#cite_note-Estrada-10"><span class="cite-bracket">[</span>10<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-34" class="reference"><a href="#cite_note-34"><span class="cite-bracket">[</span>34<span class="cite-bracket">]</span></a></sup> </p> <div class="mw-heading mw-heading3"><h3 id="Lack_of_theoretical_support">Lack of theoretical support</h3><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Fed_model&action=edit&section=5" title="Edit section: Lack of theoretical support"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p>The competing asset argument listed above argues that only when stocks have the same earnings yield as nominal government bonds, that both asset classes are equally attractive to investors. But the earnings yield (E/P) of a stock does not describe what an investor actually receives as not all earnings are paid out to the investor (either via dividends or <a href="/wiki/Share_buybacks" class="mw-redirect" title="Share buybacks">share buybacks</a>). In addition, corporate bonds (with a yield above the government bond yield as a risk premium), do not fit into the Fed model of valuation, which therefore implicitly assumes that equities have the same risk profile as government bonds.<sup id="cite_ref-Estrada2009_6-3" class="reference"><a href="#cite_note-Estrada2009-6"><span class="cite-bracket">[</span>6<span class="cite-bracket">]</span></a></sup> </p><p>For example, a number of unrealistic assumptions need to be made to go from the academically robust <a href="/wiki/Dividend_discount_model" title="Dividend discount model">constant growth dividend discount model</a> of equity valuation, to the Fed model of market valuation, which <a href="/wiki/Javier_Estrada_(professor)" title="Javier Estrada (professor)">Estrada</a> broke down, starting with the <a href="/wiki/Gordon_model" class="mw-redirect" title="Gordon model">Gordon growth model</a>:<sup id="cite_ref-Estrada_10-12" class="reference"><a href="#cite_note-Estrada-10"><span class="cite-bracket">[</span>10<span class="cite-bracket">]</span></a></sup> </p> <dl><dd><span class="mwe-math-element"><span class="mwe-math-mathml-inline mwe-math-mathml-a11y" style="display: none;"><math xmlns="http://www.w3.org/1998/Math/MathML" alttext="{\displaystyle P={\frac {D(1+G)}{R_{\text{f}}+RP-G}}}"> <semantics> <mrow class="MJX-TeXAtom-ORD"> <mstyle displaystyle="true" scriptlevel="0"> <mi>P</mi> <mo>=</mo> <mrow class="MJX-TeXAtom-ORD"> <mfrac> <mrow> <mi>D</mi> <mo stretchy="false">(</mo> <mn>1</mn> <mo>+</mo> <mi>G</mi> <mo stretchy="false">)</mo> </mrow> <mrow> <msub> <mi>R</mi> <mrow class="MJX-TeXAtom-ORD"> <mtext>f</mtext> </mrow> </msub> <mo>+</mo> <mi>R</mi> <mi>P</mi> <mo>−</mo> <mi>G</mi> </mrow> </mfrac> </mrow> </mstyle> </mrow> <annotation encoding="application/x-tex">{\displaystyle P={\frac {D(1+G)}{R_{\text{f}}+RP-G}}}</annotation> </semantics> </math></span><img src="https://wikimedia.org/api/rest_v1/media/math/render/svg/7f7e1ce05fde280a662463bcc148e29e06106d41" class="mwe-math-fallback-image-inline mw-invert skin-invert" aria-hidden="true" style="vertical-align: -2.338ex; width:19.305ex; height:6.176ex;" alt="{\displaystyle P={\frac {D(1+G)}{R_{\text{f}}+RP-G}}}"></span></dd></dl> <p>P is the price, and D the dividend, G the expected long-term growth rate, <span class="mwe-math-element"><span class="mwe-math-mathml-inline mwe-math-mathml-a11y" style="display: none;"><math xmlns="http://www.w3.org/1998/Math/MathML" alttext="{\displaystyle R_{\text{f}}}"> <semantics> <mrow class="MJX-TeXAtom-ORD"> <mstyle displaystyle="true" scriptlevel="0"> <msub> <mi>R</mi> <mrow class="MJX-TeXAtom-ORD"> <mtext>f</mtext> </mrow> </msub> </mstyle> </mrow> <annotation encoding="application/x-tex">{\displaystyle R_{\text{f}}}</annotation> </semantics> </math></span><img src="https://wikimedia.org/api/rest_v1/media/math/render/svg/121ca3e3b7cb7e12fed2f9997ce8b39ba3c032c9" class="mwe-math-fallback-image-inline mw-invert skin-invert" aria-hidden="true" style="vertical-align: -0.671ex; width:2.608ex; height:2.509ex;" alt="{\displaystyle R_{\text{f}}}"></span> the risk-free rate (10-year nominal treasury notes), and RP the <a href="/wiki/Equity_premium_puzzle" title="Equity premium puzzle">equity risk premium</a>; then making the following assumptions:<sup id="cite_ref-Estrada_10-13" class="reference"><a href="#cite_note-Estrada-10"><span class="cite-bracket">[</span>10<span class="cite-bracket">]</span></a></sup> </p> <ul><li>That <i>all</i> earnings are paid as a dividend (i.e. D=E); and</li> <li>That the dividend growth rate is equal to zero; and</li> <li>That the <a href="/wiki/Equity_risk_premium" class="mw-redirect" title="Equity risk premium">equity risk premium</a> is also equal to zero.</li></ul> <p>one gets the Fed model: E/P=<span class="mwe-math-element"><span class="mwe-math-mathml-inline mwe-math-mathml-a11y" style="display: none;"><math xmlns="http://www.w3.org/1998/Math/MathML" alttext="{\displaystyle R_{\text{f}}}"> <semantics> <mrow class="MJX-TeXAtom-ORD"> <mstyle displaystyle="true" scriptlevel="0"> <msub> <mi>R</mi> <mrow class="MJX-TeXAtom-ORD"> <mtext>f</mtext> </mrow> </msub> </mstyle> </mrow> <annotation encoding="application/x-tex">{\displaystyle R_{\text{f}}}</annotation> </semantics> </math></span><img src="https://wikimedia.org/api/rest_v1/media/math/render/svg/121ca3e3b7cb7e12fed2f9997ce8b39ba3c032c9" class="mwe-math-fallback-image-inline mw-invert skin-invert" aria-hidden="true" style="vertical-align: -0.671ex; width:2.608ex; height:2.509ex;" alt="{\displaystyle R_{\text{f}}}"></span>. Estrada finds these assumptions seem unrealistic at best, and theoretically unsound as a form of valuation.<sup id="cite_ref-Estrada_10-14" class="reference"><a href="#cite_note-Estrada-10"><span class="cite-bracket">[</span>10<span class="cite-bracket">]</span></a></sup> </p><p>In addition to the above basic flaws, it is also noted out that the Fed model compares a <i>real</i> metric (E/P, which moves with inflation), with a <i>nominal</i> interest rate metric.<sup id="cite_ref-Asness_11-4" class="reference"><a href="#cite_note-Asness-11"><span class="cite-bracket">[</span>11<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-35" class="reference"><a href="#cite_note-35"><span class="cite-bracket">[</span>35<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-36" class="reference"><a href="#cite_note-36"><span class="cite-bracket">[</span>36<span class="cite-bracket">]</span></a></sup> </p> <div class="mw-heading mw-heading3"><h3 id="Data_selection_and_international_markets">Data selection and international markets</h3><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Fed_model&action=edit&section=6" title="Edit section: Data selection and international markets"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p>The Fed model equilibrium was only observed in the United States, and for specific time periods, namely 1921 to 1928 and 1987 to 2000; outside of this time window, or in various other international markets, equities and Treasury yields do not show the relationship outlined in the Fed model.<sup id="cite_ref-Estrada2009_6-4" class="reference"><a href="#cite_note-Estrada2009-6"><span class="cite-bracket">[</span>6<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-FT3_8-4" class="reference"><a href="#cite_note-FT3-8"><span class="cite-bracket">[</span>8<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-Estrada_10-15" class="reference"><a href="#cite_note-Estrada-10"><span class="cite-bracket">[</span>10<span class="cite-bracket">]</span></a></sup> </p><p>The correlation between the forward earnings yield and government bond yields was only 19% over the 1881 to 2002 period.<sup id="cite_ref-Salomons_32-1" class="reference"><a href="#cite_note-Salomons-32"><span class="cite-bracket">[</span>32<span class="cite-bracket">]</span></a></sup> Over the period from 1999 to 2013 the correlation was negative, with the Fed model incorrectly giving a rare "sell signal" in 2003 (turned out to be a poor signal), and a strong "buy signal" in 2007 (also turned out to be a poor signal).<sup id="cite_ref-Estrada_10-16" class="reference"><a href="#cite_note-Estrada-10"><span class="cite-bracket">[</span>10<span class="cite-bracket">]</span></a></sup> An academic study of international data showed that the Fed model equilibrium only shows up in 2 out of 20 evaluated international markets, with the author concluding that "evidence from 20 countries that seriously questions its empirical merits".<sup id="cite_ref-Estrada2009_6-5" class="reference"><a href="#cite_note-Estrada2009-6"><span class="cite-bracket">[</span>6<span class="cite-bracket">]</span></a></sup> </p><p>In 2014, former <a href="/wiki/S._G._Warburg_%26_Co." title="S. G. Warburg & Co.">S. G. Warburg & Co.</a> chief investment officer, Andrew Smithers, writing in the <i><a href="/wiki/Financial_Times" title="Financial Times">Financial Times</a></i> said of the statistical support for the Fed model: "It is not only nonsense but is the most egregious piece of "data mining" that I have encountered in the 60-plus years I have been studying financial markets".<sup id="cite_ref-FT3_8-5" class="reference"><a href="#cite_note-FT3-8"><span class="cite-bracket">[</span>8<span class="cite-bracket">]</span></a></sup> </p><p>In 2017, Stuart Kirk, head of Deutsche Bank's DWS Global Research Institute and a former editor of the Financial Times <i>Lex column</i>, wrote of DWS's analysis of the long-term data: "In other words no historical relationship between bond yields and dividend yields. By extension, this means that interest rates have nothing to do with share prices either as the former lead bond yields while dividend yields move with earnings yields (the latter being the inverse of the price/earnings ratio). Yes, correlations can be found in the short run, but they are statistically meaningless".<sup id="cite_ref-FT8_37-0" class="reference"><a href="#cite_note-FT8-37"><span class="cite-bracket">[</span>37<span class="cite-bracket">]</span></a></sup> </p> <div class="mw-heading mw-heading3"><h3 id="Lack_of_predictive_power">Lack of predictive power</h3><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Fed_model&action=edit&section=7" title="Edit section: Lack of predictive power"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p>A test of whether the Fed model is an equity valuation theory with descriptive validity is that it should be able to identify over-valued and under-valued assets. The analysis shows that the Fed model has no power to forecast long term stock returns, and even crude traditional <a href="/wiki/Value_investing" title="Value investing">value investing</a> methods that use only the market's P/E have significantly more efficacy than the Fed model.<sup id="cite_ref-MH4_9-1" class="reference"><a href="#cite_note-MH4-9"><span class="cite-bracket">[</span>9<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-Asness_11-5" class="reference"><a href="#cite_note-Asness-11"><span class="cite-bracket">[</span>11<span class="cite-bracket">]</span></a></sup> </p><p>In April 2014, Dr. Yardeni wrote of his Fed model:<sup id="cite_ref-EYa_3-2" class="reference"><a href="#cite_note-EYa-3"><span class="cite-bracket">[</span>3<span class="cite-bracket">]</span></a></sup> </p> <link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1244412712"><blockquote class="templatequote"><p>[..] I discovered [the Fed model] buried in the Fed's Monetary Policy Report of July 1997. It showed a close fit between the earnings yield and the 10-year Treasury bond yield from 1987 through 1997. That's just about when the model stopped working as a useful investment tool. It did show that the S&P 500 was overvalued during the late 1990s. But it has been significantly undervalued ever since then according to the model, which never gave a sell signal in 2007 or 2008.</p><div class="templatequotecite">— <cite>Dr. Edward Yardeni (April 2014)<sup id="cite_ref-EYa_3-3" class="reference"><a href="#cite_note-EYa-3"><span class="cite-bracket">[</span>3<span class="cite-bracket">]</span></a></sup></cite></div></blockquote> <p>In 2018, <a href="/wiki/Ned_Davis_Research" class="mw-redirect" title="Ned Davis Research">Ned Davis Research</a> ran a test of the Fed model's ability to predict subsequent 10-year returns using data from the previous 75 years. Davis found that "it was basically worthless", and that it's <a href="/wiki/Coefficient_of_determination" title="Coefficient of determination">r-squared metric</a> of 0.5%, compared poorly that those of other ratios, including <a href="/wiki/Price-earnings_ratio" class="mw-redirect" title="Price-earnings ratio">P/E</a> (56.3%), <a href="/wiki/Price%E2%80%93sales_ratio" title="Price–sales ratio">P/Sales</a> (67.2%), and Households' equity allocation as a % of Total Financial Assets (88.4%).<sup id="cite_ref-MH2_12-1" class="reference"><a href="#cite_note-MH2-12"><span class="cite-bracket">[</span>12<span class="cite-bracket">]</span></a></sup> </p><p>In June 2020, finance author <a href="/wiki/Mark_Hulbert" title="Mark Hulbert">Mark Hulbert</a>, ran a statistical test from 1871 to 2020 of the Fed Model's ability to forecast the stock market's inflation-adjusted real return over subsequent 1, 5, and 10-year periods, and found that adding long-term Treasury yields, per the Fed model, materially <i>reduced</i> the predictive power of just using the earnings yield (E/P) on its own.<sup id="cite_ref-MH_15-4" class="reference"><a href="#cite_note-MH-15"><span class="cite-bracket">[</span>15<span class="cite-bracket">]</span></a></sup> </p> <div class="mw-heading mw-heading3"><h3 id="Breakdown_at_very_low_interest_rates">Breakdown at very low interest rates</h3><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Fed_model&action=edit&section=8" title="Edit section: Breakdown at very low interest rates"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p>It has been shown that the relationship between the forward earnings yield and long-term Government bond yields can more substantially breakdown during periods of very low-interest rates, and particularly very low real rates of interest,<sup id="cite_ref-JAM1_13-1" class="reference"><a href="#cite_note-JAM1-13"><span class="cite-bracket">[</span>13<span class="cite-bracket">]</span></a></sup> either from natural effects or by deliberate central banking actions such as quantitative easing.<sup id="cite_ref-EC2_2-6" class="reference"><a href="#cite_note-EC2-2"><span class="cite-bracket">[</span>2<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-Econ1_5-4" class="reference"><a href="#cite_note-Econ1-5"><span class="cite-bracket">[</span>5<span class="cite-bracket">]</span></a></sup> </p><p>Economist <a href="/wiki/Richard_Koo" title="Richard Koo">Richard Koo</a> noted that in post-1990 Japan, the bursting of an asset bubble led to a balance sheet recession that compressed Japanese long-term government bond yields to almost zero. However, the forward earnings yield on the Nikkei rose steadily for several decades post the 1990 collapse, only falling during periods of deliberate intervention by the Bank of Japan (BOI), and only really gaining traction post-2013 when the BOJ began to directly purchase Japanese equity ETFs in large quantities.<sup id="cite_ref-Koo1_14-2" class="reference"><a href="#cite_note-Koo1-14"><span class="cite-bracket">[</span>14<span class="cite-bracket">]</span></a></sup> Koo explained that in Japan the rise in the earnings yield was due to a collapse in long-term growth prospects for Japanese equities (per Gordon's growth model, above), which was compounded by the dramatic rise in the value of Japanese government bonds (from the 10-year yield falling to almost zero), which "crowded-out" equities in the allocation of investor capital.<sup id="cite_ref-Koo1_14-3" class="reference"><a href="#cite_note-Koo1-14"><span class="cite-bracket">[</span>14<span class="cite-bracket">]</span></a></sup> By December 2020, the BOJ had become the biggest owner of Japanese equities, acquired with printed funds.<sup id="cite_ref-38" class="reference"><a href="#cite_note-38"><span class="cite-bracket">[</span>38<span class="cite-bracket">]</span></a></sup> </p><p>Similarly, on the bursting of the dot-com bubble in 2002, despite the Fed reducing long-term rates post-2002, the earnings yield of the S&P500 rose consistently for the next decade from 4 percent to 9 percent, while long-term Treasury yields fell from 6 percent to 2 percent.<sup id="cite_ref-EC2_2-7" class="reference"><a href="#cite_note-EC2-2"><span class="cite-bracket">[</span>2<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-ED_4-2" class="reference"><a href="#cite_note-ED-4"><span class="cite-bracket">[</span>4<span class="cite-bracket">]</span></a></sup> Only after the then-Fed chair <a href="/wiki/Ben_Bernanke" title="Ben Bernanke">Ben Bernanke</a>, launched a longer-term quantitative easing program called <a href="/wiki/Quantitative_easing#US_QE1,_QE2,_and_QE3" title="Quantitative easing">QE3</a>, did the S&P500 earnings yield begin to move in a weak correlation with the 10-year nominal interest rate (although the gap between the E/P metric and the 10-year nominal rate remained considerable for at least the next decade).<sup id="cite_ref-ED_4-3" class="reference"><a href="#cite_note-ED-4"><span class="cite-bracket">[</span>4<span class="cite-bracket">]</span></a></sup> </p> <div class="mw-heading mw-heading2"><h2 id="Impact_of_Fed_put">Impact of Fed put</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Fed_model&action=edit&section=9" title="Edit section: Impact of Fed put"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <style data-mw-deduplicate="TemplateStyles:r1236090951">.mw-parser-output .hatnote{font-style:italic}.mw-parser-output div.hatnote{padding-left:1.6em;margin-bottom:0.5em}.mw-parser-output .hatnote i{font-style:normal}.mw-parser-output .hatnote+link+.hatnote{margin-top:-0.5em}@media print{body.ns-0 .mw-parser-output .hatnote{display:none!important}}</style><div role="note" class="hatnote navigation-not-searchable">See also: <a href="/wiki/Greenspan_put" title="Greenspan put">Greenspan put</a></div> <p>It has long puzzled academics that markets only seem to follow the Fed model in the United States, and only for specific periods (e.g. from 1987 to 2000, but not from 2001 to 2013); evidence for the existence of the relationship outside of the United States is even weaker.<sup id="cite_ref-FM1_17-3" class="reference"><a href="#cite_note-FM1-17"><span class="cite-bracket">[</span>17<span class="cite-bracket">]</span></a></sup> Work by Bekaerk and Engstrom concluded the existence of the relationship could be due to investor habit – i.e. if the relationship holds for a period, then investors will keep following it, and allocating capital that reinforces it until it stops working.<sup id="cite_ref-FM1_17-4" class="reference"><a href="#cite_note-FM1-17"><span class="cite-bracket">[</span>17<span class="cite-bracket">]</span></a></sup> </p><p>Others have questioned whether the temporary existence of the relationship in the United States is due to the <a href="/wiki/Fed_put" class="mw-redirect" title="Fed put">Fed put</a> (also known as the Greenspan put).<sup id="cite_ref-Stig_18-1" class="reference"><a href="#cite_note-Stig-18"><span class="cite-bracket">[</span>18<span class="cite-bracket">]</span></a></sup> They argue that from time to time, the Fed has used the Fed model as a guide on the issue of providing "<a href="/wiki/Repurchase_agreements" class="mw-redirect" title="Repurchase agreements">repurchase agreements</a>" (or "repo trades") to Wall Street investment banks; repo trades, as part of the Fed put toolkit, have been used by the Fed to inflate United States asset prices, either to arrest falls in crises or to generate economic growth. Under this theory, it is the Wall Street investment banks who drive the Fed model relationship via the allocation of their repo trades into the markets, which when done on a continuous and steady basis, can also create the investor habit observed by Bekaerk and Engstrom (analysts at the Wall Street investment banks are noted by academics,<sup id="cite_ref-Estrada_10-17" class="reference"><a href="#cite_note-Estrada-10"><span class="cite-bracket">[</span>10<span class="cite-bracket">]</span></a></sup> and financial authors,<sup id="cite_ref-MH_15-5" class="reference"><a href="#cite_note-MH-15"><span class="cite-bracket">[</span>15<span class="cite-bracket">]</span></a></sup> as some of the strongest supporters of the rationale for the Fed model relationship).<sup id="cite_ref-FM1_17-5" class="reference"><a href="#cite_note-FM1-17"><span class="cite-bracket">[</span>17<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-BK3_19-1" class="reference"><a href="#cite_note-BK3-19"><span class="cite-bracket">[</span>19<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-Stig_18-2" class="reference"><a href="#cite_note-Stig-18"><span class="cite-bracket">[</span>18<span class="cite-bracket">]</span></a></sup> The use of the Greenspan put by Wall Street investment banks in the 1990s to fund <a href="/wiki/Long-Term_Capital_Management" title="Long-Term Capital Management">Long-Term Capital Management</a> (LTCM), is a noted example,<sup id="cite_ref-FT12_16-1" class="reference"><a href="#cite_note-FT12-16"><span class="cite-bracket">[</span>16<span class="cite-bracket">]</span></a></sup> and was the additional use of the Greenspan put to rescue those Wall Street banks after LTCM's collapse.<sup id="cite_ref-39" class="reference"><a href="#cite_note-39"><span class="cite-bracket">[</span>39<span class="cite-bracket">]</span></a></sup> </p> <div class="mw-heading mw-heading2"><h2 id="See_also">See also</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Fed_model&action=edit&section=10" title="Edit section: See also"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <ul><li><a href="/wiki/Cyclically_adjusted_price-to-earnings_ratio" title="Cyclically adjusted price-to-earnings ratio">Cyclically adjusted price-to-earnings ratio</a></li> <li><a href="/wiki/Equity_risk_premium" class="mw-redirect" title="Equity risk premium">Equity risk premium</a></li> <li><a href="/wiki/Everything_bubble" title="Everything bubble">Everything bubble</a></li> <li><a href="/wiki/Greenspan_put" title="Greenspan put">Greenspan put</a></li></ul> <div class="mw-heading mw-heading2"><h2 id="References">References</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Fed_model&action=edit&section=11" title="Edit section: References"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <style data-mw-deduplicate="TemplateStyles:r1239543626">.mw-parser-output .reflist{margin-bottom:0.5em;list-style-type:decimal}@media screen{.mw-parser-output .reflist{font-size:90%}}.mw-parser-output .reflist .references{font-size:100%;margin-bottom:0;list-style-type:inherit}.mw-parser-output .reflist-columns-2{column-width:30em}.mw-parser-output .reflist-columns-3{column-width:25em}.mw-parser-output .reflist-columns{margin-top:0.3em}.mw-parser-output .reflist-columns ol{margin-top:0}.mw-parser-output .reflist-columns li{page-break-inside:avoid;break-inside:avoid-column}.mw-parser-output .reflist-upper-alpha{list-style-type:upper-alpha}.mw-parser-output .reflist-upper-roman{list-style-type:upper-roman}.mw-parser-output .reflist-lower-alpha{list-style-type:lower-alpha}.mw-parser-output .reflist-lower-greek{list-style-type:lower-greek}.mw-parser-output .reflist-lower-roman{list-style-type:lower-roman}</style><div class="reflist"> <div class="mw-references-wrap mw-references-columns"><ol class="references"> <li id="cite_note-IE2-1"><span class="mw-cite-backlink"><b><a href="#cite_ref-IE2_1-0">^</a></b></span> <span class="reference-text"><style data-mw-deduplicate="TemplateStyles:r1238218222">.mw-parser-output cite.citation{font-style:inherit;word-wrap:break-word}.mw-parser-output .citation q{quotes:"\"""\"""'""'"}.mw-parser-output .citation:target{background-color:rgba(0,127,255,0.133)}.mw-parser-output .id-lock-free.id-lock-free a{background:url("//upload.wikimedia.org/wikipedia/commons/6/65/Lock-green.svg")right 0.1em center/9px no-repeat}.mw-parser-output .id-lock-limited.id-lock-limited a,.mw-parser-output .id-lock-registration.id-lock-registration a{background:url("//upload.wikimedia.org/wikipedia/commons/d/d6/Lock-gray-alt-2.svg")right 0.1em center/9px no-repeat}.mw-parser-output .id-lock-subscription.id-lock-subscription a{background:url("//upload.wikimedia.org/wikipedia/commons/a/aa/Lock-red-alt-2.svg")right 0.1em center/9px no-repeat}.mw-parser-output .cs1-ws-icon a{background:url("//upload.wikimedia.org/wikipedia/commons/4/4c/Wikisource-logo.svg")right 0.1em center/12px no-repeat}body:not(.skin-timeless):not(.skin-minerva) .mw-parser-output .id-lock-free a,body:not(.skin-timeless):not(.skin-minerva) .mw-parser-output .id-lock-limited a,body:not(.skin-timeless):not(.skin-minerva) .mw-parser-output .id-lock-registration a,body:not(.skin-timeless):not(.skin-minerva) .mw-parser-output .id-lock-subscription a,body:not(.skin-timeless):not(.skin-minerva) .mw-parser-output .cs1-ws-icon a{background-size:contain;padding:0 1em 0 0}.mw-parser-output .cs1-code{color:inherit;background:inherit;border:none;padding:inherit}.mw-parser-output .cs1-hidden-error{display:none;color:var(--color-error,#d33)}.mw-parser-output .cs1-visible-error{color:var(--color-error,#d33)}.mw-parser-output .cs1-maint{display:none;color:#085;margin-left:0.3em}.mw-parser-output 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title="ctx_ver=Z39.88-2004&rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Abook&rft.genre=book&rft.btitle=Irrational+Exuberance+%282d+ed.%29&rft.pub=Princeton+University+Press&rft.date=2005&rft.isbn=0-691-12335-7&rft.aulast=Shiller&rft.aufirst=Robert&rfr_id=info%3Asid%2Fen.wikipedia.org%3AFed+model" class="Z3988"></span></span> </li> <li id="cite_note-EC2-2"><span class="mw-cite-backlink">^ <a href="#cite_ref-EC2_2-0"><sup><i><b>a</b></i></sup></a> <a href="#cite_ref-EC2_2-1"><sup><i><b>b</b></i></sup></a> <a href="#cite_ref-EC2_2-2"><sup><i><b>c</b></i></sup></a> <a href="#cite_ref-EC2_2-3"><sup><i><b>d</b></i></sup></a> <a href="#cite_ref-EC2_2-4"><sup><i><b>e</b></i></sup></a> <a href="#cite_ref-EC2_2-5"><sup><i><b>f</b></i></sup></a> <a href="#cite_ref-EC2_2-6"><sup><i><b>g</b></i></sup></a> <a href="#cite_ref-EC2_2-7"><sup><i><b>h</b></i></sup></a></span> <span class="reference-text"><link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1238218222"><cite 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Retrieved <span class="nowrap">17 December</span> 2020</span>.</cite><span title="ctx_ver=Z39.88-2004&rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Ajournal&rft.genre=article&rft.jtitle=The+Economist&rft.atitle=Burying+the+%22Fed+model%22&rft.date=2012-11-29&rft_id=https%3A%2F%2Fwww.economist.com%2Fbuttonwoods-notebook%2F2012%2F11%2F29%2Fburying-the-fed-model&rfr_id=info%3Asid%2Fen.wikipedia.org%3AFed+model" class="Z3988"></span></span> </li> <li id="cite_note-EYa-3"><span class="mw-cite-backlink">^ <a href="#cite_ref-EYa_3-0"><sup><i><b>a</b></i></sup></a> <a href="#cite_ref-EYa_3-1"><sup><i><b>b</b></i></sup></a> <a href="#cite_ref-EYa_3-2"><sup><i><b>c</b></i></sup></a> <a href="#cite_ref-EYa_3-3"><sup><i><b>d</b></i></sup></a></span> <span class="reference-text"><link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1238218222"><cite id="CITEREFYardeni2014" class="citation web cs1">Yardeni, Dr. Edward (28 April 2014). <a rel="nofollow" class="external text" href="https://www.businessinsider.com/the-fed-model-buybacks-and-ma-2014-4?r=US&IR=T">"The 'Fed Model' Is Better At Predicting Corporate Financial Behavior Than Investment Returns"</a>. <i><a href="/wiki/Business_Insider" title="Business Insider">Business Insider</a></i><span class="reference-accessdate">. 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This arises as the lower bond yield implies heightened macroeconomic risk (e.g. deflation and economic stagnation) and causes equity and bond prices to move in opposite directions.</q></cite><span title="ctx_ver=Z39.88-2004&rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Ajournal&rft.genre=article&rft.jtitle=Journal+of+Asset+Management&rft.atitle=Equity%2Fbond+yield+correlation+and+the+FED+model%3A+evidence+of+switching+behaviour+from+the+G7+markets&rft.volume=19&rft.issue=6&rft.pages=413-428&rft.date=2018&rft_id=info%3Ahdl%2F1893%2F27892&rft_id=https%3A%2F%2Fapi.semanticscholar.org%2FCorpusID%3A158210939%23id-name%3DS2CID&rft_id=info%3Adoi%2F10.1057%2Fs41260-018-0091-x&rft.aulast=Humpe&rft.aufirst=Andreas&rft.au=McMillan%2C+David&rfr_id=info%3Asid%2Fen.wikipedia.org%3AFed+model" class="Z3988"></span></span> </li> <li id="cite_note-Koo1-14"><span class="mw-cite-backlink">^ <a href="#cite_ref-Koo1_14-0"><sup><i><b>a</b></i></sup></a> <a href="#cite_ref-Koo1_14-1"><sup><i><b>b</b></i></sup></a> <a href="#cite_ref-Koo1_14-2"><sup><i><b>c</b></i></sup></a> <a href="#cite_ref-Koo1_14-3"><sup><i><b>d</b></i></sup></a></span> <span class="reference-text"><link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1238218222"><cite id="CITEREFRichard_Koo2014" class="citation book cs1"><a href="/wiki/Richard_Koo" title="Richard Koo">Richard Koo</a> (October 2014). <i>The Escape from Balance Sheet Recession and the QE Trap: A Hazardous Road for the World Economy Kindle Edition</i>. <a href="/wiki/Wiley_(publisher)" title="Wiley (publisher)">Wiley</a>. <a href="/wiki/ISBN_(identifier)" class="mw-redirect" title="ISBN (identifier)">ISBN</a> <a href="/wiki/Special:BookSources/978-1119028123" title="Special:BookSources/978-1119028123"><bdi>978-1119028123</bdi></a>.</cite><span title="ctx_ver=Z39.88-2004&rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Abook&rft.genre=book&rft.btitle=The+Escape+from+Balance+Sheet+Recession+and+the+QE+Trap%3A+A+Hazardous+Road+for+the+World+Economy+Kindle+Edition&rft.pub=Wiley&rft.date=2014-10&rft.isbn=978-1119028123&rft.au=Richard+Koo&rfr_id=info%3Asid%2Fen.wikipedia.org%3AFed+model" class="Z3988"></span></span> </li> <li id="cite_note-MH-15"><span class="mw-cite-backlink">^ <a href="#cite_ref-MH_15-0"><sup><i><b>a</b></i></sup></a> <a href="#cite_ref-MH_15-1"><sup><i><b>b</b></i></sup></a> <a href="#cite_ref-MH_15-2"><sup><i><b>c</b></i></sup></a> <a href="#cite_ref-MH_15-3"><sup><i><b>d</b></i></sup></a> <a href="#cite_ref-MH_15-4"><sup><i><b>e</b></i></sup></a> <a href="#cite_ref-MH_15-5"><sup><i><b>f</b></i></sup></a></span> <span class="reference-text"><link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1238218222"><cite id="CITEREFHulbert2020" class="citation web cs1"><a href="/wiki/Mark_Hulbert" title="Mark Hulbert">Hulbert, Mark</a> (27 June 2020). <a rel="nofollow" class="external text" href="https://www.marketwatch.com/story/the-fed-model-is-almost-always-bullish-which-makes-it-a-perfect-face-for-this-too-good-to-be-true-stock-market-2020-06-23">"The Fed Model is almost always bullish, which makes it a perfect face for this too-good-to-be-true stock market"</a>. <i><a href="/wiki/MarketWatch" title="MarketWatch">MarketWatch</a></i><span class="reference-accessdate">. Retrieved <span class="nowrap">24 December</span> 2020</span>.</cite><span title="ctx_ver=Z39.88-2004&rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Ajournal&rft.genre=unknown&rft.jtitle=MarketWatch&rft.atitle=The+Fed+Model+is+almost+always+bullish%2C+which+makes+it+a+perfect+face+for+this+too-good-to-be-true+stock+market&rft.date=2020-06-27&rft.aulast=Hulbert&rft.aufirst=Mark&rft_id=https%3A%2F%2Fwww.marketwatch.com%2Fstory%2Fthe-fed-model-is-almost-always-bullish-which-makes-it-a-perfect-face-for-this-too-good-to-be-true-stock-market-2020-06-23&rfr_id=info%3Asid%2Fen.wikipedia.org%3AFed+model" class="Z3988"></span></span> </li> <li id="cite_note-FT12-16"><span class="mw-cite-backlink">^ <a href="#cite_ref-FT12_16-0"><sup><i><b>a</b></i></sup></a> <a href="#cite_ref-FT12_16-1"><sup><i><b>b</b></i></sup></a></span> <span class="reference-text"><link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1238218222"><cite id="CITEREFThomas2007" class="citation news cs1">Thomas, Helen (22 May 2007). <a rel="nofollow" class="external text" href="https://www.ft.com/content/2fbc32ca-5e3d-38a7-ad6f-bf9fe4bd89fa">"LTCM and the Greenspan put"</a>. <i><a href="/wiki/Financial_Times" title="Financial Times">Financial Times</a></i><span class="reference-accessdate">. Retrieved <span class="nowrap">30 January</span> 2021</span>.</cite><span title="ctx_ver=Z39.88-2004&rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Ajournal&rft.genre=article&rft.jtitle=Financial+Times&rft.atitle=LTCM+and+the+Greenspan+put&rft.date=2007-05-22&rft.aulast=Thomas&rft.aufirst=Helen&rft_id=https%3A%2F%2Fwww.ft.com%2Fcontent%2F2fbc32ca-5e3d-38a7-ad6f-bf9fe4bd89fa&rfr_id=info%3Asid%2Fen.wikipedia.org%3AFed+model" class="Z3988"></span></span> </li> <li id="cite_note-FM1-17"><span class="mw-cite-backlink">^ <a href="#cite_ref-FM1_17-0"><sup><i><b>a</b></i></sup></a> <a href="#cite_ref-FM1_17-1"><sup><i><b>b</b></i></sup></a> <a href="#cite_ref-FM1_17-2"><sup><i><b>c</b></i></sup></a> <a href="#cite_ref-FM1_17-3"><sup><i><b>d</b></i></sup></a> <a href="#cite_ref-FM1_17-4"><sup><i><b>e</b></i></sup></a> <a href="#cite_ref-FM1_17-5"><sup><i><b>f</b></i></sup></a></span> <span class="reference-text"><link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1238218222"><cite id="CITEREFBekaertEngstrom,_Eric2008" class="citation journal cs1">Bekaert, Geert; Engstrom, Eric (April 2008). 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Norton & Company. <a href="/wiki/ISBN_(identifier)" class="mw-redirect" title="ISBN (identifier)">ISBN</a> <a href="/wiki/Special:BookSources/9780393075960" title="Special:BookSources/9780393075960"><bdi>9780393075960</bdi></a>.</cite><span title="ctx_ver=Z39.88-2004&rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Abook&rft.genre=book&rft.btitle=Freefall%3A+America%2C+Free+Markets%2C+and+the+Sinking+of+the+World+Economy&rft.place=New+York+and+London&rft.pub=W.+W.+Norton+%26+Company&rft.date=2010&rft.isbn=9780393075960&rft.aulast=Stiglitz&rft.aufirst=Joseph+E.&rft_id=https%3A%2F%2Farchive.org%2Fdetails%2Ffreefallamericaf00stig%2Fpage%2F135&rfr_id=info%3Asid%2Fen.wikipedia.org%3AFed+model" class="Z3988"></span></span> </li> <li id="cite_note-BK3-19"><span class="mw-cite-backlink">^ <a href="#cite_ref-BK3_19-0"><sup><i><b>a</b></i></sup></a> <a href="#cite_ref-BK3_19-1"><sup><i><b>b</b></i></sup></a></span> <span class="reference-text"><link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1238218222"><cite id="CITEREFSummers2017" class="citation book cs1">Summers, Graham (October 2017). <i>The Everything Bubble: The Endgame For Central Bank Policy</i>. <a href="/wiki/CreateSpace" title="CreateSpace">CreateSpace</a>. <a href="/wiki/ISBN_(identifier)" class="mw-redirect" title="ISBN (identifier)">ISBN</a> <a href="/wiki/Special:BookSources/978-1974634064" title="Special:BookSources/978-1974634064"><bdi>978-1974634064</bdi></a>.</cite><span title="ctx_ver=Z39.88-2004&rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Abook&rft.genre=book&rft.btitle=The+Everything+Bubble%3A+The+Endgame+For+Central+Bank+Policy&rft.pub=CreateSpace&rft.date=2017-10&rft.isbn=978-1974634064&rft.aulast=Summers&rft.aufirst=Graham&rfr_id=info%3Asid%2Fen.wikipedia.org%3AFed+model" class="Z3988"></span></span> </li> <li id="cite_note-AG-20"><span class="mw-cite-backlink">^ <a href="#cite_ref-AG_20-0"><sup><i><b>a</b></i></sup></a> <a href="#cite_ref-AG_20-1"><sup><i><b>b</b></i></sup></a></span> <span class="reference-text"><link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1238218222"><cite id="CITEREFGreenspan2007" class="citation book cs1">Greenspan, Alan (2007). <i><a href="/wiki/The_Age_of_Turbulence" title="The Age of Turbulence">The Age of Turbulence: Adventures in a New World</a></i>. 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Retrieved <span class="nowrap">30 January</span> 2021</span>.</cite><span title="ctx_ver=Z39.88-2004&rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Ajournal&rft.genre=unknown&rft.jtitle=The+Big+Picture&rft.atitle=Unintended+Consequences%2C+Part+II%3A+What+if+LTCM+Was+Not+Rescued+in+1998%3F&rft.date=2020-04-22&rft.aulast=Rithhotz&rft.aufirst=Barry&rft_id=https%3A%2F%2Fritholtz.com%2F2020%2F04%2Funintended-consequences-ltcm-rescued%2F&rfr_id=info%3Asid%2Fen.wikipedia.org%3AFed+model" class="Z3988"></span></span> </li> </ol></div></div> <div class="mw-heading mw-heading3"><h3 id="Further_reading">Further reading</h3><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Fed_model&action=edit&section=12" title="Edit section: Further reading"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <ul><li><link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1238218222"><cite id="CITEREFAsness2003" class="citation journal cs1"><a href="/wiki/Cliff_Asness" title="Cliff Asness">Asness, Clifford S.</a> (Fall 2003). <a rel="nofollow" class="external text" href="https://jpm.pm-research.com/content/30/1/11">"Fight the Fed Model: The Relationship between Stock Market Yields, Bond Market Yields, and Future Returns"</a>. <i><a href="/wiki/The_Journal_of_Portfolio_Management" title="The Journal of Portfolio Management">The Journal of Portfolio Management</a></i>. <b>30</b> (1). <a href="/wiki/Doi_(identifier)" class="mw-redirect" title="Doi (identifier)">doi</a>:<a rel="nofollow" class="external text" href="https://doi.org/10.3905%2Fjpm.2003.319916">10.3905/jpm.2003.319916</a>. <a href="/wiki/S2CID_(identifier)" class="mw-redirect" title="S2CID (identifier)">S2CID</a> <a rel="nofollow" class="external text" href="https://api.semanticscholar.org/CorpusID:155012499">155012499</a>.</cite><span title="ctx_ver=Z39.88-2004&rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Ajournal&rft.genre=article&rft.jtitle=The+Journal+of+Portfolio+Management&rft.atitle=Fight+the+Fed+Model%3A+The+Relationship+between+Stock+Market+Yields%2C+Bond+Market+Yields%2C+and+Future+Returns&rft.ssn=fall&rft.volume=30&rft.issue=1&rft.date=2003&rft_id=info%3Adoi%2F10.3905%2Fjpm.2003.319916&rft_id=https%3A%2F%2Fapi.semanticscholar.org%2FCorpusID%3A155012499%23id-name%3DS2CID&rft.aulast=Asness&rft.aufirst=Clifford+S.&rft_id=https%3A%2F%2Fjpm.pm-research.com%2Fcontent%2F30%2F1%2F11&rfr_id=info%3Asid%2Fen.wikipedia.org%3AFed+model" class="Z3988"></span></li> <li><link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1238218222"><cite id="CITEREFEstrada2009" class="citation journal cs1"><a href="/wiki/Javier_Estrada_(professor)" title="Javier Estrada (professor)">Estrada, Javier</a> (May 2009). <a rel="nofollow" class="external text" href="https://www.sciencedirect.com/science/article/abs/pii/S1062976907000853">"The fed model: The bad, the worse, and the ugly"</a>. <i>The Quarterly Review of Economics and Finance</i>. <b>49</b> (2): 214–238. <a href="/wiki/Doi_(identifier)" class="mw-redirect" title="Doi (identifier)">doi</a>:<a rel="nofollow" class="external text" href="https://doi.org/10.1016%2Fj.qref.2007.03.007">10.1016/j.qref.2007.03.007</a>. <a href="/wiki/ISSN_(identifier)" class="mw-redirect" title="ISSN (identifier)">ISSN</a> <a rel="nofollow" class="external text" href="https://search.worldcat.org/issn/1062-9769">1062-9769</a>.</cite><span title="ctx_ver=Z39.88-2004&rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Ajournal&rft.genre=article&rft.jtitle=The+Quarterly+Review+of+Economics+and+Finance&rft.atitle=The+fed+model%3A+The+bad%2C+the+worse%2C+and+the+ugly&rft.volume=49&rft.issue=2&rft.pages=214-238&rft.date=2009-05&rft_id=info%3Adoi%2F10.1016%2Fj.qref.2007.03.007&rft.issn=1062-9769&rft.aulast=Estrada&rft.aufirst=Javier&rft_id=https%3A%2F%2Fwww.sciencedirect.com%2Fscience%2Farticle%2Fabs%2Fpii%2FS1062976907000853&rfr_id=info%3Asid%2Fen.wikipedia.org%3AFed+model" class="Z3988"></span></li> <li><link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1238218222"><cite id="CITEREFCantorButlerRajani2014" class="citation web cs1">Cantor, David R.; Butler, Adam; Rajani, Kunal (2014). <a rel="nofollow" class="external text" href="https://www.soa.org/globalassets/assets/files/resources/essays-monographs/invest-fallacies/inv-ebook-2014-cantor.pdf">"The Fallacy of the Fed Model"</a> <span class="cs1-format">(PDF)</span>. <i><a href="/wiki/Society_of_Actuaries" title="Society of Actuaries">Society of Actuaries</a></i><span class="reference-accessdate">. Retrieved <span class="nowrap">17 December</span> 2020</span>.</cite><span title="ctx_ver=Z39.88-2004&rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Ajournal&rft.genre=unknown&rft.jtitle=Society+of+Actuaries&rft.atitle=The+Fallacy+of+the+Fed+Model&rft.date=2014&rft.aulast=Cantor&rft.aufirst=David+R.&rft.au=Butler%2C+Adam&rft.au=Rajani%2C+Kunal&rft_id=https%3A%2F%2Fwww.soa.org%2Fglobalassets%2Fassets%2Ffiles%2Fresources%2Fessays-monographs%2Finvest-fallacies%2Finv-ebook-2014-cantor.pdf&rfr_id=info%3Asid%2Fen.wikipedia.org%3AFed+model" class="Z3988"></span></li></ul> <div class="mw-heading mw-heading2"><h2 id="External_links">External links</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Fed_model&action=edit&section=13" title="Edit section: External links"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <style data-mw-deduplicate="TemplateStyles:r1235681985">.mw-parser-output .side-box{margin:4px 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.plainlist ol li,.mw-parser-output .plainlist ul li{margin-bottom:0}</style> <div class="side-box-flex"> <div class="side-box-image"><span class="noviewer" typeof="mw:File"><span><img alt="" src="//upload.wikimedia.org/wikipedia/commons/thumb/3/32/Scholia_logo.svg/40px-Scholia_logo.svg.png" decoding="async" width="40" height="39" class="mw-file-element" srcset="//upload.wikimedia.org/wikipedia/commons/thumb/3/32/Scholia_logo.svg/60px-Scholia_logo.svg.png 1.5x, //upload.wikimedia.org/wikipedia/commons/thumb/3/32/Scholia_logo.svg/80px-Scholia_logo.svg.png 2x" data-file-width="107" data-file-height="104" /></span></span></div> <div class="side-box-text plainlist"><a href="https://www.wikidata.org/wiki/Wikidata:Scholia" class="extiw" title="d:Wikidata:Scholia">Scholia</a> has a profile for <a href="https://iw.toolforge.org/scholia/Q5439904" class="extiw" title="toolforge:scholia/Q5439904"><b>Fed model <small>(Q5439904)</small></b></a>.</div></div> </div> <ul><li><a rel="nofollow" class="external text" href="https://www.yardeni.com/pub/valuationfed.pdf">Fed Stock Valuation Model</a>, Monthly Update, Dr. Edward Yardeni</li> <li><a rel="nofollow" class="external text" href="http://www.investopedia.com/articles/03/112703.asp">Investopedia: The Fed Model and Stock Valuation</a></li> <li><a rel="nofollow" class="external text" href="http://www.investopedia.com/articles/stocks/08/fed-model.asp">Investopedia: Breaking down the Fed model</a></li> <li><a rel="nofollow" class="external text" href="https://seekingalpha.com/article/222632-debunking-the-fed-model">Seeking Alpha: Debunking the Fed model</a></li> <li><a rel="nofollow" class="external text" href="https://www.ft.com/content/25201e10-3ca2-11e8-b7e0-52972418fec4">Relationship between bond and dividend yields has no grounds</a>, <i><a href="/wiki/Financial_Times" title="Financial Times">Financial Times</a></i> (2017)</li> <li><a rel="nofollow" class="external text" href="https://www.youtube.com/watch?v=8E-ZFmgw4dg">(Video presentation) Fed Up with the Fed Model | Charts that Count</a>, <a href="/wiki/John_Authers" title="John Authers">John Authers</a>, <i><a href="/wiki/Financial_Times" title="Financial Times">Financial Times</a></i> (September 2018)</li></ul> <div class="navbox-styles"><style data-mw-deduplicate="TemplateStyles:r1129693374">.mw-parser-output .hlist dl,.mw-parser-output .hlist ol,.mw-parser-output .hlist ul{margin:0;padding:0}.mw-parser-output .hlist dd,.mw-parser-output .hlist dt,.mw-parser-output .hlist li{margin:0;display:inline}.mw-parser-output .hlist.inline,.mw-parser-output .hlist.inline dl,.mw-parser-output .hlist.inline ol,.mw-parser-output .hlist.inline ul,.mw-parser-output .hlist dl dl,.mw-parser-output .hlist dl ol,.mw-parser-output .hlist dl ul,.mw-parser-output .hlist ol dl,.mw-parser-output .hlist ol ol,.mw-parser-output .hlist ol ul,.mw-parser-output .hlist ul dl,.mw-parser-output .hlist ul ol,.mw-parser-output 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//upload.wikimedia.org/wikipedia/commons/thumb/1/1a/Seal_of_the_United_States_Federal_Reserve_System.svg/160px-Seal_of_the_United_States_Federal_Reserve_System.svg.png 2x" data-file-width="249" data-file-height="249" /></span></span></div></td></tr><tr><th scope="row" class="navbox-group" style="width:1%">Reports</th><td class="navbox-list-with-group navbox-list navbox-even" style="width:100%;padding:0"><div style="padding:0 0.25em"> <ul><li><a href="/wiki/Beige_Book" title="Beige Book">Beige Book</a></li> <li><a href="/wiki/Federal_Reserve_Statistical_Release" title="Federal Reserve Statistical Release">Federal Reserve Statistical Release</a></li> <li><a href="/wiki/Monetary_Policy_Report_to_the_Congress" title="Monetary Policy Report to the Congress">Monetary Policy Report to the Congress</a></li></ul> </div></td></tr><tr><th scope="row" class="navbox-group" style="width:1%">Federal funds</th><td class="navbox-list-with-group navbox-list navbox-odd" style="width:100%;padding:0"><div style="padding:0 0.25em"> <ul><li><a href="/wiki/Discount_window" title="Discount window">Discount window</a> <ul><li><a href="/wiki/Bank_rate" title="Bank rate">Bank rate</a></li></ul></li> <li><a href="/wiki/Federal_funds" title="Federal funds">Federal funds</a></li> <li><a href="/wiki/Federal_funds_rate" title="Federal funds rate">Federal funds rate</a> <ul><li><a href="/wiki/Overnight_rate" title="Overnight rate">Overnight rate</a></li></ul></li> <li><a href="/wiki/Primary_dealer" title="Primary dealer">Primary dealer</a></li></ul> </div></td></tr><tr><th scope="row" class="navbox-group" style="width:1%"><a href="/wiki/History_of_the_Federal_Reserve_System" title="History of the Federal Reserve System">History</a><br />(<a href="/wiki/History_of_central_banking_in_the_United_States" title="History of central banking in the United States">Antecedents</a>)</th><td class="navbox-list-with-group navbox-list navbox-even" style="width:100%;padding:0"><div style="padding:0 0.25em"> <ul><li><a href="/wiki/Aldrich%E2%80%93Vreeland_Act" title="Aldrich–Vreeland Act">Aldrich–Vreeland Act</a> (1908)</li> <li><a href="/wiki/National_Monetary_Commission" title="National Monetary Commission">National Monetary Commission</a> (1909–1912)</li> <li><a href="/wiki/Federal_Reserve_Act" title="Federal Reserve Act">Federal Reserve Act</a> (1913)</li> <li><a href="/wiki/Pittman_Act" title="Pittman Act">Pittman Act</a> (1918)</li> <li><a href="/wiki/Edge_Act" title="Edge Act">Edge Act</a> (1919)</li> <li><a href="/wiki/Phelan_Act_of_1920" title="Phelan Act of 1920">Phelan Act</a> (1920)</li> <li><a href="/wiki/Regulation_D_(FRB)" title="Regulation D (FRB)">Regulation D</a> (c. 1930)</li> <li><a href="/wiki/Emergency_Banking_Act" class="mw-redirect" title="Emergency Banking Act">Emergency Banking Act</a> (1933)</li> <li><a href="/wiki/Regulation_Q" title="Regulation Q">Regulation Q</a> (1933)</li> <li><a href="/wiki/1933_Banking_Act" title="1933 Banking Act">Glass–Steagall Act</a> (1933)</li> <li><a href="/wiki/Gold_Reserve_Act" title="Gold Reserve Act">Gold Reserve Act</a> (1934)</li> <li><a href="/wiki/Banking_Act_of_1935" title="Banking Act of 1935">Banking Act of 1935</a></li> <li><a href="/wiki/Bretton_Woods_system" title="Bretton Woods system">Bretton Woods system</a> (1944–1971)</li> <li><a href="/wiki/Employment_Act_of_1946" title="Employment Act of 1946">Employment Act of 1946</a></li> <li><a href="/wiki/History_of_the_Federal_Reserve_System" title="History of the Federal Reserve System">U.S. Treasury Department Accord</a> (1951)</li> <li><a href="/wiki/Bank_Holding_Company_Act" title="Bank Holding Company Act">Bank Holding Company Act</a> (1956)</li> <li><a href="/wiki/History_of_Federal_Open_Market_Committee_actions" title="History of Federal Open Market Committee actions">FOMC actions</a> (1961–present)</li> <li><a href="/wiki/Truth_in_Lending_Act" title="Truth in Lending Act">Truth in Lending Act</a> (1968)</li> <li><a href="/wiki/Nixon_shock" title="Nixon shock">Nixon shock</a> (1971)</li> <li><a href="/wiki/Smithsonian_Agreement" title="Smithsonian Agreement">Smithsonian Agreement</a> (1971)</li> <li><a href="/wiki/Equal_Credit_Opportunity_Act" title="Equal Credit Opportunity Act">Equal Credit Opportunity Act</a> (1974)</li> <li><a href="/wiki/Home_Mortgage_Disclosure_Act" title="Home Mortgage Disclosure Act">Home Mortgage Disclosure Act</a> (1975)</li> <li><a href="/wiki/Community_Reinvestment_Act" title="Community Reinvestment Act">Community Reinvestment Act</a> (1977)</li> <li><a href="/wiki/Federal_Reserve_Reform_Act_of_1977" title="Federal Reserve Reform Act of 1977">Federal Reserve Reform Act</a> (1977)</li> <li><a href="/wiki/Electronic_Fund_Transfer_Act" title="Electronic Fund Transfer Act">Electronic Fund Transfer Act</a> (1978)</li> <li><a href="/wiki/Humphrey%E2%80%93Hawkins_Full_Employment_Act" title="Humphrey–Hawkins Full Employment Act">Humphrey–Hawkins Full Employment Act</a> (1978)</li> <li><a href="/wiki/International_Banking_Act_of_1978" title="International Banking Act of 1978">International Banking Act</a> (1978)</li> <li><a href="/wiki/Depository_Institutions_Deregulation_and_Monetary_Control_Act" title="Depository Institutions Deregulation and Monetary Control Act">DIDMC Act</a> (1980)</li> <li><i><a href="/wiki/Board_of_Governors,_FRS_v._Investment_Co._Institute" title="Board of Governors, FRS v. Investment Co. Institute">Federal Reserve v. Investment Co. Institute</a></i> (1981)</li> <li><i><a href="/wiki/Bank_of_New_England" title="Bank of New England">Northeast Bancorp v. Federal Reserve</a></i> (1985)</li> <li><a href="/wiki/Greenspan_put" title="Greenspan put">Greenspan put</a> (1987)</li> <li><a href="/wiki/Expedited_Funds_Availability_Act" title="Expedited Funds Availability Act">Expedited Funds Availability Act</a> (1987)</li> <li><a href="/wiki/Financial_Institutions_Reform,_Recovery,_and_Enforcement_Act_of_1989" title="Financial Institutions Reform, Recovery, and Enforcement Act of 1989">FIRRE Act</a> (1989)</li> <li><a href="/wiki/Federal_Deposit_Insurance_Corporation_Improvement_Act_of_1991" title="Federal Deposit Insurance Corporation Improvement Act of 1991">FDIC Improvement Act</a> (1991)</li> <li><a href="/wiki/Gramm%E2%80%93Leach%E2%80%93Bliley_Act" title="Gramm–Leach–Bliley Act">Gramm–Leach–Bliley Act</a> (1999)</li> <li><a href="/wiki/Federal_Reserve_responses_to_the_subprime_crisis" title="Federal Reserve responses to the subprime crisis">Subprime mortgage crisis responses</a> (2007–2010)</li> <li><a href="/wiki/Emergency_Economic_Stabilization_Act_of_2008" title="Emergency Economic Stabilization Act of 2008">Emergency Economic Stabilization Act</a> (2008)</li> <li><a href="/wiki/Unfair_or_Deceptive_Acts_or_Practices" title="Unfair or Deceptive Acts or Practices">Unfair or Deceptive Acts or Practices</a> (2008)</li> <li><a href="/wiki/Commercial_Paper_Funding_Facility" title="Commercial Paper Funding Facility">Commercial Paper Funding Facility</a> (2008–2010)</li> <li><a href="/wiki/Primary_Dealer_Credit_Facility" title="Primary Dealer Credit Facility">Primary Dealer Credit Facility</a> (2008–2010)</li> <li><i><a href="/wiki/Bloomberg_L.P._v._Board_of_Governors_of_the_Federal_Reserve_System" title="Bloomberg L.P. v. Board of Governors of the Federal Reserve System">Bloomberg v. Federal Reserve</a></i> (2009)</li> <li><a href="/wiki/2009_Supervisory_Capital_Assessment_Program" title="2009 Supervisory Capital Assessment Program">2009 Supervisory Capital Assessment Program</a></li> <li><a href="/wiki/Term_Asset-Backed_Securities_Loan_Facility" title="Term Asset-Backed Securities Loan Facility">Term Asset-Backed Securities Loan Facility</a> (2009–2010)</li> <li><a href="/wiki/Public%E2%80%93Private_Investment_Program_for_Legacy_Assets" title="Public–Private Investment Program for Legacy Assets">Public–Private Investment Program for Legacy Assets</a> (2009–)</li> <li><a href="/wiki/Dodd%E2%80%93Frank_Wall_Street_Reform_and_Consumer_Protection_Act" title="Dodd–Frank Wall Street Reform and Consumer Protection Act">Dodd–Frank Act</a> (2010; <a href="/wiki/Durbin_amendment" title="Durbin amendment">Durbin amendment</a>)</li> <li><a href="/wiki/Commercial_Paper_Funding_Facility" title="Commercial Paper Funding Facility">Commercial Paper Funding Facility</a> (2020–2021)</li> <li><i><a href="/wiki/Corner_Post,_Inc._v._Board_of_Governors_of_the_Federal_Reserve_System" title="Corner Post, Inc. v. Board of Governors of the Federal Reserve System">Corner Post v. Federal Reserve</a></i> (2024)</li></ul> </div></td></tr><tr><th scope="row" class="navbox-group" style="width:1%"><a href="/wiki/Chair_of_the_Federal_Reserve" title="Chair of the Federal Reserve">Chairs</a></th><td class="navbox-list-with-group navbox-list navbox-odd" style="width:100%;padding:0"><div style="padding:0 0.25em"> <ul><li><a href="/wiki/Charles_Sumner_Hamlin" title="Charles Sumner Hamlin">Charles S. Hamlin</a> (1914–1916)</li> <li><a href="/wiki/William_P._G._Harding" title="William P. G. Harding">William P. G. Harding</a> (1916–1922)</li> <li><a href="/wiki/Daniel_Richard_Crissinger" title="Daniel Richard Crissinger">Daniel R. Crissinger</a> (1923–1927)</li> <li><a href="/wiki/Roy_A._Young" title="Roy A. Young">Roy A. Young</a> (1927–1930)</li> <li><a href="/wiki/Eugene_Meyer_(financier)" title="Eugene Meyer (financier)">Eugene Meyer</a> (1930–1933)</li> <li><a href="/wiki/Eugene_Robert_Black" title="Eugene Robert Black">Eugene R. Black</a> (1933–1934)</li> <li><a href="/wiki/Marriner_S._Eccles" title="Marriner S. Eccles">Marriner S. Eccles</a> (1934–1948)</li> <li><a href="/wiki/Thomas_B._McCabe" title="Thomas B. McCabe">Thomas B. McCabe</a> (1948–1951)</li> <li><a href="/wiki/William_McChesney_Martin" title="William McChesney Martin">William M. Martin</a> (1951–1970)</li> <li><a href="/wiki/Arthur_F._Burns" title="Arthur F. Burns">Arthur F. Burns</a> (1970–1978)</li> <li><a href="/wiki/G._William_Miller" title="G. William Miller">G. William Miller</a> (1978–1979)</li> <li><a href="/wiki/Paul_Volcker" title="Paul Volcker">Paul Volcker</a> (1979–1987)</li> <li><a href="/wiki/Alan_Greenspan" title="Alan Greenspan">Alan Greenspan</a> (1987–2006)</li> <li><a href="/wiki/Ben_Bernanke" title="Ben Bernanke">Ben Bernanke</a> (2006–2014)</li> <li><a href="/wiki/Janet_Yellen" title="Janet Yellen">Janet Yellen</a> (2014–2018)</li> <li><a href="/wiki/Jerome_Powell" title="Jerome Powell">Jerome Powell</a> (2018–present)</li></ul> </div></td></tr><tr><th scope="row" class="navbox-group" style="width:1%"><a href="/wiki/Federal_Reserve_Board_of_Governors" title="Federal Reserve Board of Governors">Current<br />governors</a></th><td class="navbox-list-with-group navbox-list navbox-even" style="width:100%;padding:0"><div style="padding:0 0.25em"> <ul><li><a href="/wiki/Jerome_Powell" title="Jerome Powell">Jerome Powell</a> (<a href="/wiki/Chair_of_the_Federal_Reserve" title="Chair of the Federal Reserve">Chair</a>)</li> <li><a href="/wiki/Philip_Jefferson" title="Philip Jefferson">Philip Jefferson</a> (<a href="/wiki/Vice_Chair_of_the_Federal_Reserve" title="Vice Chair of the Federal Reserve">Vice Chair</a>)</li> <li><a href="/wiki/Michael_Barr_(Treasury_official)" class="mw-redirect" title="Michael Barr (Treasury official)">Michael Barr</a> (<a href="/wiki/Vice_Chair_of_the_Federal_Reserve" title="Vice Chair of the Federal Reserve">Vice Chair for Supervision</a>)</li> <li><a href="/wiki/Michelle_Bowman" title="Michelle Bowman">Michelle Bowman</a></li> <li><a href="/wiki/Christopher_Waller" title="Christopher Waller">Christopher Waller</a></li> <li><a href="/wiki/Lisa_D._Cook" title="Lisa D. Cook">Lisa D. Cook</a></li> <li><a href="/wiki/Adriana_Kugler" title="Adriana Kugler">Adriana Kugler</a></li></ul> </div></td></tr><tr><th scope="row" class="navbox-group" style="width:1%">Current presidents<br />(by district)</th><td class="navbox-list-with-group navbox-list navbox-odd" style="width:100%;padding:0"><div style="padding:0 0.25em"> <ul><li><a href="/wiki/Susan_M._Collins_(economist)" title="Susan M. Collins (economist)">Susan Collins</a> (<a href="/wiki/Federal_Reserve_Bank_of_Boston" title="Federal Reserve Bank of Boston">Boston</a>)</li> <li><a href="/wiki/John_C._Williams_(economist)" title="John C. Williams (economist)">John Williams</a> (<a href="/wiki/Federal_Reserve_Bank_of_New_York" title="Federal Reserve Bank of New York">New York</a>)</li> <li><a href="/wiki/Patrick_T._Harker" title="Patrick T. Harker">Patrick T. Harker</a> (<a href="/wiki/Federal_Reserve_Bank_of_Philadelphia" title="Federal Reserve Bank of Philadelphia">Philadelphia</a>)</li> <li><a href="/wiki/Beth_M._Hammack" title="Beth M. Hammack">Beth M. Hammack</a> (<a href="/wiki/Federal_Reserve_Bank_of_Cleveland" title="Federal Reserve Bank of Cleveland">Cleveland</a>)</li> <li><a href="/wiki/Thomas_Barkin" title="Thomas Barkin">Thomas Barkin</a> (<a href="/wiki/Federal_Reserve_Bank_of_Richmond" title="Federal Reserve Bank of Richmond">Richmond</a>)</li> <li><a href="/wiki/Raphael_Bostic" title="Raphael Bostic">Raphael Bostic</a> (<a href="/wiki/Federal_Reserve_Bank_of_Atlanta" title="Federal Reserve Bank of Atlanta">Atlanta</a>)</li> <li><a href="/wiki/Austan_Goolsbee" title="Austan Goolsbee">Austan Goolsbee</a> (<a href="/wiki/Federal_Reserve_Bank_of_Chicago" title="Federal Reserve Bank of Chicago">Chicago</a>)</li> <li><a href="/wiki/Alberto_Musalem" title="Alberto Musalem">Alberto Musalem</a> (<a href="/wiki/Federal_Reserve_Bank_of_St._Louis" title="Federal Reserve Bank of St. Louis">St. Louis</a>)</li> <li><a href="/wiki/Neel_Kashkari" title="Neel Kashkari">Neel Kashkari</a> (<a href="/wiki/Federal_Reserve_Bank_of_Minneapolis" title="Federal Reserve Bank of Minneapolis">Minneapolis</a>)</li> <li><a href="/wiki/Jeffrey_Schmid" title="Jeffrey Schmid">Jeff Schmid</a> (<a href="/wiki/Federal_Reserve_Bank_of_Kansas_City" title="Federal Reserve Bank of Kansas City">Kansas City</a>)</li> <li><a href="/wiki/Lorie_K._Logan" title="Lorie K. Logan">Lorie Logan</a> (<a href="/wiki/Federal_Reserve_Bank_of_Dallas" title="Federal Reserve Bank of Dallas">Dallas</a>)</li> <li><a href="/wiki/Mary_C._Daly" title="Mary C. Daly">Mary C. Daly</a> (<a href="/wiki/Federal_Reserve_Bank_of_San_Francisco" title="Federal Reserve Bank of San Francisco">San Francisco</a>)</li></ul> </div></td></tr><tr><th scope="row" class="navbox-group" style="width:1%">Related</th><td class="navbox-list-with-group navbox-list navbox-even" style="width:100%;padding:0"><div style="padding:0 0.25em"> <ul><li><a href="/wiki/Central_bank" title="Central bank">Central bank</a></li> <li><a href="/wiki/Criticism_of_the_Federal_Reserve" title="Criticism of the Federal Reserve">Criticism of the Federal Reserve</a></li> <li><a class="mw-selflink selflink">Fed model</a></li> <li><a href="/wiki/Fedspeak" title="Fedspeak">Fedspeak</a></li> <li><a href="/wiki/Fed_put" class="mw-redirect" title="Fed put">Fed put</a></li> <li><a href="/wiki/Lender_of_last_resort" title="Lender of last resort">Lender of last resort</a></li> <li><a href="/wiki/Monetary_policy_of_the_United_States" title="Monetary policy of the United States">Monetary policy of the United States</a> <ul><li><a href="/wiki/History_of_monetary_policy_in_the_United_States" title="History of monetary policy in the United States">History</a></li></ul></li> <li><a href="/wiki/Personal_consumption_expenditures_price_index" title="Personal consumption expenditures price index">Personal consumption expenditures price index</a></li> <li><a href="/wiki/Sahm_rule" title="Sahm rule">Sahm rule</a></li></ul> </div></td></tr></tbody></table></div> <div class="navbox-styles"><link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1129693374"><link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1236075235"></div><div role="navigation" class="navbox" aria-labelledby="Financial_markets" style="padding:3px"><table class="nowraplinks hlist mw-collapsible autocollapse navbox-inner" style="border-spacing:0;background:transparent;color:inherit"><tbody><tr><th scope="col" class="navbox-title" colspan="2"><link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1129693374"><link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1239400231"><div class="navbar plainlinks hlist navbar-mini"><ul><li class="nv-view"><a href="/wiki/Template:Financial_markets_navigation" title="Template:Financial markets navigation"><abbr title="View this template">v</abbr></a></li><li class="nv-talk"><a href="/wiki/Template_talk:Financial_markets_navigation" title="Template talk:Financial markets navigation"><abbr title="Discuss this template">t</abbr></a></li><li class="nv-edit"><a href="/wiki/Special:EditPage/Template:Financial_markets_navigation" title="Special:EditPage/Template:Financial markets navigation"><abbr title="Edit this template">e</abbr></a></li></ul></div><div id="Financial_markets" style="font-size:114%;margin:0 4em"><a href="/wiki/Financial_market" title="Financial market">Financial markets</a></div></th></tr><tr><th scope="row" class="navbox-group" style="width:1%">Types of <a href="/wiki/Capital_market" title="Capital market">markets</a></th><td class="navbox-list-with-group navbox-list navbox-odd" style="width:100%;padding:0"><div style="padding:0 0.25em"> <ul><li><a href="/wiki/Primary_market" title="Primary market">Primary market</a></li> <li><a href="/wiki/Secondary_market" title="Secondary market">Secondary market</a></li> <li><a href="/wiki/Third_market" title="Third market">Third market</a></li> <li><a href="/wiki/Fourth_market" title="Fourth market">Fourth market</a></li></ul> </div></td></tr><tr><th scope="row" class="navbox-group" style="width:1%">Types of <a href="/wiki/Stock" title="Stock">stocks</a></th><td class="navbox-list-with-group navbox-list navbox-even" style="width:100%;padding:0"><div style="padding:0 0.25em"> <ul><li><a href="/wiki/Common_stock" title="Common stock">Common stock</a></li> <li><a href="/wiki/Golden_share" title="Golden share">Golden share</a></li> <li><a href="/wiki/Preferred_stock" title="Preferred stock">Preferred stock</a></li> <li><a href="/wiki/Restricted_stock" title="Restricted stock">Restricted stock</a></li> <li><a href="/wiki/Tracking_stock" title="Tracking stock">Tracking stock</a></li></ul> </div></td></tr><tr><th scope="row" class="navbox-group" style="width:1%"><a href="/wiki/Share_capital" title="Share capital">Share capital</a></th><td class="navbox-list-with-group navbox-list navbox-odd" style="width:100%;padding:0"><div style="padding:0 0.25em"> <ul><li><a href="/wiki/Authorised_capital" title="Authorised capital">Authorised capital</a></li> <li><a href="/wiki/Issued_shares" title="Issued shares">Issued shares</a></li> <li><a href="/wiki/Shares_outstanding" title="Shares outstanding">Shares outstanding</a></li> <li><a href="/wiki/Treasury_stock" title="Treasury stock">Treasury stock</a></li></ul> </div></td></tr><tr><th scope="row" class="navbox-group" style="width:1%">Participants</th><td class="navbox-list-with-group navbox-list navbox-even" style="width:100%;padding:0"><div style="padding:0 0.25em"> <ul><li><a href="/wiki/Broker" title="Broker">Broker</a> <ul><li><a href="/wiki/Floor_broker" title="Floor broker">Floor broker</a></li> <li><a href="/wiki/Inter-dealer_broker" title="Inter-dealer broker">Inter-dealer broker</a></li></ul></li> <li><a href="/wiki/Broker-dealer" title="Broker-dealer">Broker-dealer</a></li> <li><a href="/wiki/Market_maker" title="Market maker">Market maker</a></li> <li><a href="/wiki/Trader_(finance)" title="Trader (finance)">Trader</a> <ul><li><a href="/wiki/Floor_trader" title="Floor trader">Floor trader</a></li> <li><a href="/wiki/Proprietary_trading" title="Proprietary trading">Proprietary trader</a></li></ul></li> <li><a href="/wiki/Quantitative_analyst" class="mw-redirect" title="Quantitative analyst">Quantitative analyst</a></li> <li><a href="/wiki/Investor" title="Investor">Investor</a></li> <li><a href="/wiki/Hedge_(finance)" title="Hedge (finance)">Hedger</a></li> <li><a href="/wiki/Speculator" class="mw-redirect" title="Speculator">Speculator</a></li> <li><a href="/wiki/Arbitrage" title="Arbitrage">Arbitrager</a> <ul><li><a href="/wiki/Scalping_(trading)" title="Scalping (trading)">Scalper</a></li></ul></li> <li><a href="/wiki/Financial_regulation" title="Financial regulation">Regulator</a></li></ul> </div></td></tr><tr><th scope="row" class="navbox-group" style="width:1%">Trading venues</th><td class="navbox-list-with-group navbox-list navbox-odd" style="width:100%;padding:0"><div style="padding:0 0.25em"> <ul><li><a href="/wiki/Exchange_(organized_market)" title="Exchange (organized market)">Exchange</a> <ul><li><a href="/wiki/List_of_stock_exchanges" class="mw-redirect" title="List of stock exchanges">List of stock exchanges</a></li> <li><a href="/wiki/List_of_stock_exchange_trading_hours" class="mw-redirect" title="List of stock exchange trading hours">Trading hours</a></li></ul></li> <li><a href="/wiki/Over-the-counter_(finance)" title="Over-the-counter (finance)">Over-the-counter</a> (off-exchange)</li> <li><a href="/wiki/Alternative_trading_system" title="Alternative trading system">Alternative trading system</a> (ATS)</li> <li><a href="/wiki/Multilateral_trading_facility" title="Multilateral trading facility">Multilateral trading facility</a> (MTF)</li> <li><a href="/wiki/Electronic_communication_network" title="Electronic communication network">Electronic communication network</a> (ECN)</li> <li><a href="/wiki/Direct_market_access" title="Direct market access">Direct market access</a> (DMA)</li> <li><a href="/wiki/Straight-through_processing" title="Straight-through processing">Straight-through processing</a> (STP)</li> <li><a href="/wiki/Dark_pool" title="Dark pool">Dark pool</a> (private exchange)</li> <li><a href="/wiki/Crossing_network" title="Crossing network">Crossing network</a></li> <li><a href="/wiki/Foreign_exchange_aggregator" title="Foreign exchange aggregator">Liquidity aggregator</a></li></ul> </div></td></tr><tr><th scope="row" class="navbox-group" style="width:1%"><a href="/wiki/Stock_valuation" title="Stock valuation">Stock valuation</a></th><td class="navbox-list-with-group navbox-list navbox-even" style="width:100%;padding:0"><div style="padding:0 0.25em"> <ul><li><a href="/wiki/Alpha_(finance)" title="Alpha (finance)">Alpha</a></li> <li><a href="/wiki/Arbitrage_pricing_theory" title="Arbitrage pricing theory">Arbitrage pricing theory</a> (APT)</li> <li><a href="/wiki/Beta_(finance)" title="Beta (finance)">Beta</a></li> <li><a href="/wiki/Buffett_indicator" title="Buffett indicator">Buffett indicator</a> (Cap-to-GDP)</li> <li><a href="/wiki/Book_value" title="Book value">Book value</a> (BV)</li> <li><a href="/wiki/Capital_asset_pricing_model" title="Capital asset pricing model">Capital asset pricing model</a> (CAPM)</li> <li><a href="/wiki/Capital_market_line" title="Capital market line">Capital market line</a> (CML)</li> <li><a href="/wiki/Dividend_discount_model" title="Dividend discount model">Dividend discount model</a> (DDM)</li> <li><a href="/wiki/Dividend_yield" title="Dividend yield">Dividend yield</a></li> <li><a href="/wiki/Earnings_yield" title="Earnings yield">Earnings yield</a></li> <li><a href="/wiki/EV/EBITDA" class="mw-redirect" title="EV/EBITDA">EV/EBITDA</a></li> <li><a class="mw-selflink selflink">Fed model</a></li> <li><a href="/wiki/Net_asset_value" title="Net asset value">Net asset value</a> (NAV)</li> <li><a href="/wiki/Security_characteristic_line" title="Security characteristic line">Security characteristic line</a></li> <li><a href="/wiki/Security_market_line" title="Security market line">Security market line</a> (SML)</li> <li><a href="/wiki/T-model" title="T-model">T-model</a></li></ul> </div></td></tr><tr><th scope="row" class="navbox-group" style="width:1%">Trading theories<br /> and <a href="/wiki/Trading_strategy" title="Trading strategy">strategies</a></th><td class="navbox-list-with-group navbox-list navbox-odd" style="width:100%;padding:0"><div style="padding:0 0.25em"> <ul><li><a href="/wiki/Algorithmic_trading" title="Algorithmic trading">Algorithmic trading</a></li> <li><a href="/wiki/Buy_and_hold" title="Buy and hold">Buy and hold</a></li> <li><a href="/wiki/Contrarian_investing" title="Contrarian investing">Contrarian investing</a></li> <li><a href="/wiki/Dollar_cost_averaging" title="Dollar cost averaging">Dollar cost averaging</a></li> <li><a href="/wiki/Efficient-market_hypothesis" title="Efficient-market hypothesis">Efficient-market hypothesis</a> (EMH)</li> <li><a href="/wiki/Fundamental_analysis" title="Fundamental analysis">Fundamental analysis</a></li> <li><a href="/wiki/Growth_stock" title="Growth stock">Growth stock</a></li> <li><a href="/wiki/Market_timing" title="Market timing">Market timing</a></li> <li><a href="/wiki/Modern_portfolio_theory" title="Modern portfolio theory">Modern portfolio theory</a> (MPT)</li> <li><a href="/wiki/Momentum_investing" title="Momentum investing">Momentum investing</a></li> <li><a href="/wiki/Mosaic_theory_(investments)" title="Mosaic theory (investments)">Mosaic theory</a></li> <li><a href="/wiki/Pairs_trade" title="Pairs trade">Pairs trade</a></li> <li><a href="/wiki/Post-modern_portfolio_theory" title="Post-modern portfolio theory">Post-modern portfolio theory</a> (PMPT)</li> <li><a href="/wiki/Random_walk_hypothesis" title="Random walk hypothesis">Random walk hypothesis</a> (RMH)</li> <li><a href="/wiki/Sector_rotation" title="Sector rotation">Sector rotation</a></li> <li><a href="/wiki/Style_investing" title="Style investing">Style investing</a></li> <li><a href="/wiki/Swing_trading" title="Swing trading">Swing trading</a></li> <li><a href="/wiki/Technical_analysis" title="Technical analysis">Technical analysis</a></li> <li><a href="/wiki/Trend_following" title="Trend following">Trend following</a></li> <li><a href="/wiki/Value_averaging" title="Value averaging">Value averaging</a></li> <li><a href="/wiki/Value_investing" title="Value investing">Value investing</a></li></ul> </div></td></tr><tr><th scope="row" class="navbox-group" style="width:1%">Related terms</th><td class="navbox-list-with-group navbox-list navbox-even" style="width:100%;padding:0"><div style="padding:0 0.25em"> <ul><li><a href="/wiki/Bid%E2%80%93ask_spread" title="Bid–ask spread">Bid–ask spread</a></li> <li><a href="/wiki/Block_trade" title="Block trade">Block trade</a></li> <li><a href="/wiki/Cross_listing" title="Cross listing">Cross listing</a></li> <li><a href="/wiki/Dividend" title="Dividend">Dividend</a></li> <li><a href="/wiki/Dual-listed_company" title="Dual-listed company">Dual-listed company</a></li> <li><a href="/wiki/DuPont_analysis" title="DuPont analysis">DuPont analysis</a></li> <li><a href="/wiki/Efficient_frontier" title="Efficient frontier">Efficient frontier</a></li> <li><a href="/wiki/Financial_law" title="Financial law">Financial law</a></li> <li><a href="/wiki/Flight-to-quality" title="Flight-to-quality">Flight-to-quality</a></li> <li><a href="/wiki/Government_bond" title="Government bond">Government bond</a></li> <li><a href="/wiki/Greenspan_put" title="Greenspan put">Greenspan put</a></li> <li><a href="/wiki/Haircut_(finance)" title="Haircut (finance)">Haircut</a></li> <li><a href="/wiki/Initial_public_offering" title="Initial public offering">Initial public offering</a> (IPO)</li> <li><a href="/wiki/Long_(finance)" title="Long (finance)">Long</a></li> <li><a href="/wiki/Mandatory_offer" title="Mandatory offer">Mandatory offer</a></li> <li><a href="/wiki/Margin_(finance)" title="Margin (finance)">Margin</a></li> <li><a href="/wiki/Market_anomaly" title="Market anomaly">Market anomaly</a></li> <li><a href="/wiki/Market_capitalization" title="Market capitalization">Market capitalization</a></li> <li><a href="/wiki/Market_depth" title="Market depth">Market depth</a></li> <li><a href="/wiki/Market_manipulation" title="Market manipulation">Market manipulation</a></li> <li><a href="/wiki/Market_trend" title="Market trend">Market trend</a></li> <li><a href="/wiki/Mean_reversion_(finance)" title="Mean reversion (finance)">Mean reversion</a></li> <li><a href="/wiki/Momentum_(finance)" title="Momentum (finance)">Momentum</a></li> <li><a href="/wiki/Open_outcry" title="Open outcry">Open outcry</a></li> <li><a href="/wiki/Order_book" title="Order book">Order book</a></li> <li><a href="/wiki/Position_(finance)" title="Position (finance)">Position</a></li> <li><a href="/wiki/Public_float" title="Public float">Public float</a></li> <li><a href="/wiki/Public_offering" title="Public offering">Public offering</a></li> <li><a href="/wiki/Rally_(stock_market)" title="Rally (stock market)">Rally</a></li> <li><a href="/wiki/Returns-based_style_analysis" title="Returns-based style analysis">Returns-based style analysis</a></li> <li><a href="/wiki/Reverse_stock_split" title="Reverse stock split">Reverse stock split</a></li> <li><a href="/wiki/Share_repurchase" title="Share repurchase">Share repurchase</a></li> <li><a href="/wiki/Short_(finance)" title="Short (finance)">Short selling</a></li> <li><a href="/wiki/Short_squeeze" title="Short squeeze">Short squeeze</a></li> <li><a href="/wiki/Slippage_(finance)" title="Slippage (finance)">Slippage</a></li> <li><a href="/wiki/Speculation" title="Speculation">Speculation</a></li> <li><a href="/wiki/Squeeze-out" title="Squeeze-out">Squeeze-out</a></li> <li><a href="/wiki/Stock_dilution" title="Stock dilution">Stock dilution</a></li> <li><a href="/wiki/Stock_exchange" title="Stock exchange">Stock exchange</a></li> <li><a href="/wiki/Stock_market_index" title="Stock market index">Stock market index</a></li> <li><a href="/wiki/Stock_split" title="Stock split">Stock split</a></li> <li><a href="/wiki/Stock_swap" title="Stock swap">Stock swap</a></li> <li><a href="/wiki/Trade_(financial_instrument)" class="mw-redirect" title="Trade (financial instrument)">Trade</a></li> 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