The S&P 500 Cyclically Adjusted PE (aka S&P 500 or Shiller PE10 or CAPE) – August 2012 Update

This is the Retirement Investing Today monthly update for the S&P500 Cyclically Adjusted PE (S&P 500 CAPE).  Last month’s update can be found here.

Before we look at the CAPE let us first look at other key S&P 500 metrics:

• The S&P 500 Price is currently 1,406 which is 3.4% above last month’s Price of 1,360 and 18.6% above this time last year’s Price of 1,185.
• The S&P 500 Dividend Yield is currently 2.01%.
• The S&P As Reported Earnings (using a combination of actual and estimated earnings) are currently $90.02.
• The S&P 500 P/E Ratio is currently 15.6 which is up from last month’s 15.2.

The Greater Fool UK House Price Index – August 2012 Update

This is the monthly update of the Greater Fool UK House Price Index.  This is a unique feature which to my knowledge is only available on Retirement Investing Today.  The background to this House Price Index is available here.

Let us first look at the latest prices within the four datasets that are used to build the Index:

• The Rightmove House Price Index.  This index tracks asking prices of properties as they come onto the market.  Asking prices in July were £242,097 which month on month is a fall of 1.7% and year on year is an increase of 2.3%.

• The Halifax House Price Index.  This index is based on buying prices of houses where loan approvals are agreed by Halifax Bank of Scotland.  Sales prices in July were £162,619 which month on month is a fall of 0.4% and year on year is a fall of 1.3%. 

• The Nationwide House Price Index.  This index is based on buying prices of houses where loan approvals are agreed by Nationwide Building Society.  Sales prices in July were £164,389 which month on month is a fall of 0.8% and year on year is a fall of 2.6%. 

• The Land Registry House Price Index.  This contains the house prices for all transactions in England and Wales.  This includes both mortgages (which the Halifax and Nationwide would be included within) and non-mortgages (cash transactions).  Sales prices in June were £161,777 which month on month is an increase of 0.1% and year on year is an increase of 0.9%. 

The cheapest low cost SIPP (Self Invested Personal Pension)

Two pillars of my Retirement Investing Today strategy are to continually work to minimise expenses and taxes (total costs) while keeping to my required asset classes and investment types within the class.  I work on the principle that I can’t control what happens in the markets but I can control the costs of investing.  Now there is not much that is guaranteed in the investing world however I can’t think of any case where this strategy if done properly does not provide free return. 

UK House Affordability – August 2012 Update

 

The Nationwide today announced that nominally the average UK house now costs £164,389 which month on month is a fall of £1,349 or -0.8%.  Year on year the fall is £4,341 or -2.6%.  Nominally this puts prices back to levels last seen in mid 2006.

Looking at the Nationwide Historical House Price dataset in inflation adjusted terms (Chart 1), to account for the devaluation of sterling, it however tells a very different story.  This tells us that year on year real prices are down £9,006 or 5.2%.  By this measure UK house prices are back to levels last seen in May 2003.

Is the London 2012 Olympics going to drive the UK deeper into recession?

The construction for the 2012 Olympic Games is now over.  The less than £9 billion stumped up by UK taxpayers (£142 for every man, woman and child in the UK) has been spent into the economy and claimed as GDP.  Now it's time to reap the real rewards as the thousands and thousands of visitors from across the globe descend upon London, spend spend spend, put massive pressure on the transport system and generally crowd out the city.  Anyone who lives in the UK and particularly London will have heard the cries to stay away if possible.  If not possible then plan and book journeys well in advance.  With these warnings ringing in my ears it was with much fear and trepidation that I awoke this morning and realised I had to travel into central London.

This is my journey....

 

After a surprisingly easy Tube journey I alight at Tottenham Court Road and wonder if I am really in one of the countries busiest streets on a Sunday.  I never intended this to become a blog post and so apologise as I only had a cheap camera phone with me to record the day.