APPENDIX D S&P Index Still Undervalued * D espite overvaluation concerns, the rise in the S&P 500 Index appears to be earnings driven and not speculative. The Risk Premium Factor (RPF) Model shows that the S&P 500 is undervalued by about 7 percent, narrowing from the 30 percent undervaluation estimate that I reported in my September 28, 2010, article (see Appendix C) and the 20% that I reported on November 8, 2010. This suggests continued opportunities for investors, corporate buybacks, and mergers and acquisitions (M&A). The narrowing of the gap was caused by rising Treasury yields, which drive down predicted levels coupled with an increase in the index. While