This is a trading item or a component that was created using QuantShare by one of our members.
This item can be downloaded and used by QuantShare Trading Software.
Trading items are of different types. There are data downloaders, trading indicators, trading systems, watchlists, composites/indices...
You can use this item and hundreds of others for free by downloading QuantShare.
Top Reasons Why You Should Use QuantShare:
Works with US and international markets (stock, forex, options, futures, ETF...)
Offers you the tools that will help you become a profitable trader
Allows you to implement any trading ideas
Exchange items and ideas with other QuantShare users
Our support team is very responsive and will answer any of your questions
We will implement any features you suggest
Very low price and much more features than the majority of other trading software
For Free - No Credit Card Required
Measure the value of the stock market using the Q-Ratio valuation method
The Q-Ratio, developed by the economist James Tobin, is a market valuation method used to estimate the fair value of the stock market. It is calculated by taking the total price of the market and dividing it by the replacement cost of all companies in that market.
The total price of the market is not calculated based on the total stock market capitalization; it is obtained from the following time series: nonfarm nonfinancial corporate business net worth (market value) - Ticker Symbol: ^FL102090005.Q
The replacement cost is obtained from the following time series: nonfarm nonfinancial corporate business corporate equities liability - Ticker Symbol: ^FL103164003.Q
This economic trading indicator simply divides the second time series by the first one.
The analysis of the Q-Ratio shows that its average value over the last 20 quarters is 0.9179, while the last Q value is 1.0402. The Q-Value is usually compared to its moving average; a value higher than the average means that the stock market is overvalued and a value lower than the average means that the stock market is undervalued.
Other stock market valuation methods include the cyclically adjusted P/E (price-earnings ratio) and the price to book, which are two stock valuation ratios usually calculated based on the S&P 500 companies (S&P Earnings, S&P 500 Earnings and Price Earnings Ratio Estimations).
The indicator is called "QRatio" and it doesn't require any parameter; example:
a = QRatio();
Plot(a,"Q-Ratio Valuation Method",colorGreen,chartLine,styleOwnScale);