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Big Tech PE Ratios, Mortgage Rates, Market Neutral Funds | What’s Trending on YCharts?
With every edition of What’s Trending on YCharts?, we reveal the stocks, funds, and economic data that generated the most traffic each month on YCharts. Are any of these names or data points on your radar?
Although downward price momentum is mostly to blame, price-to-earnings (P/E) ratios are on the decline, representing a reduction of heightened equity valuations. For some of the biggest public companies around, like Apple, Tesla and Amazon, P/E ratios peaked in late 2021 but have fallen considerably this year.
At what prices do these companies become cheap enough to trigger meaningful buying?
This chart is a great illustration of “market neutral” funds and their potential benefits relative to the S&P 500. While Beta for Vanguard’s Market Neutral Fund Investor Shares (VMNFX) has always fluctuated around 0.00, its Alpha has lifted considerably during the S&P’s pullback in 2022. There’s certainly a time and place for market neutrality—we’re living through one such time right now—but VMNFX, and market neutral funds like it, pale over the long run compared to an index ETF such as SPY.
Despite clocking in at an all-time low of 2.65%, then a decade-high of 5.3% in the span of just nine months, the 30-Year Mortgage Rate most recently sat at 5.1%—still 268 basis points below its long-term average of 7.78%. This chart illustrates just how much the housing (and lending) market has evolved since sky-high rates of the 1980s. It also shows us just how much mortgage rates can swing year-over-year.