{"id":1536,"date":"2010-08-10T09:02:30","date_gmt":"2010-08-10T13:02:30","guid":{"rendered":"http:\/\/www.credittrends.com\/blog\/?p=1536"},"modified":"2010-08-12T09:46:45","modified_gmt":"2010-08-12T13:46:45","slug":"probability-of-a-stock-market-crash","status":"publish","type":"post","link":"https:\/\/www.credittrends.com\/blog\/2010\/08\/10\/probability-of-a-stock-market-crash\/","title":{"rendered":"Probability of a Stock Market Crash Versus 1 Year Ago"},"content":{"rendered":"

CT Capital’s cost of capital and other models provide key data from which to decompose stock market risk. With that, our “crash predictor” is presented.<\/p>\n

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There are at least 70 variables we look at and evaluate, from sales to taxes,\u00a0stability, sovereign risk, insurance, pensions, return on invested\u00a0capital, management,corporate\u00a0“fat” etc., all of which is\u00a0explained\u00a0in that little brown and blue book to the right.<\/p>\n\n\n\n\n\n\n\n\n
DATE<\/td>\nCURRENT PROBABILITY<\/td>\nMAIN REASONS FOR STRENGTH<\/td>\nMAIN REASONS FOR WEAKNESS<\/td>\nPROBABILITY- A YEAR AGO<\/td>\n<\/tr>\n
Aug 10, 2010<\/td>\n14%<\/td>\nCredit, fin, flex, fcf,valuation, mgt spending discretion<\/td>\nConsumer conf, power ocf, nom yields,housing, stability metrics<\/td>\n9%<\/td>\n<\/tr>\n
Aug 11, 2010<\/td>\n15%<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n9%<\/td>\n<\/tr>\n
\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n
\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n
\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

A stock market \u201ccrash\u201d is defined as a 20% rapid decline in the widely followed equity indexes.<\/p>\n

The probability is based on: (1) growth of operating and free cash flows; (2) cost of equity capital versus return on invested capital; (3) world economic conditions as measured by\u00a0 various yield spreads; (4) valuation multiples; (5) VIX\u00a0; (6) money supply growth; (7) leverage and credit conditions; (8) nominal and real interest rates;\u00a0 (9) any miscellaneous factors\u00a0relevant\u00a0to the time period; and,\u00a0\u00a0(10) the CT Capital’s quantitative risk models.<\/p>\n

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CT Capital’s cost of capital and other models provide key data from which to decompose stock market risk. With that, our “crash predictor” is presented. READ FULL ARTICLE Share on Facebook Tweet This Post<\/p>\n

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