No. of Recommendations: 5
The chart indicates that both grey lines are "1.55 x smoothed peak book value", and the yellow line is "WMA16 * 1.55". Is the latter 1.55 * average book values over the most recent 16 quarters? I'm not Said, but the smoothing method is one that I suggested.
"WMA" means "Weighted Moving Average", an average which emphasizes more recent data. WMA16 means it is a WMA of 16 numbers.
If you have 16 observations (in this case, quarterly book-per-share figures), the most recent figure gets a weight of 16, the second-most-recent a weight of 15, etc, all the way down to the oldest that gets a weight of 1. This gives substantial smoothing because it considers four years of data, but reacts reasonably quickly if there is a big change.
This is a similar image I did in late January, which shows 1- and 2-standard deviation lines above the smoothed "value" line, being the variation of how well it fits the price history. I haven't done an updated one since then.
https://www.stonewellfunds.com/SmoothedRealValuePe...Jim
