The S&P 500 is approximately at its long-term average P/E multiple of 20x (if one looks back to 1964). However, that multiple could go lower should the Fed hold rates higher for a longer period than what many investors expect. Further, markets tend not to bottom until after the Fed begins to cut rates (we … Continue reading How Low Will Valuations Go?
Tag: PE multiples
P/E multiples will be in flux for the next few months. Phase I will begin in October. Phase II will begin in January. The sequence will look something like the following: Analysts: Many sell-side analysts will revise their December quarter Revenue and Earnings estimates downward coming off of the September quarter earnings calls beginning in … Continue reading P/E Multiples In Flux
While the S&P 500 index is down approximately 21% YTD, it appreciated 44% from its pre-COVID high in February 2020 to its recent high during January 2022. One could argue that the pre-COVID high of February 2020 was a rich valuation for the index which benefited from years of accomodative Fed policy and low inflation. … Continue reading Earnings Estimates Are Too High
Forward PE multiples are too low. Given where the numerator is, S&P 500 forward PE multiples ought to be far higher. Earnings estimates are inflated and need to come down. The stark contrast between PE multiples during the Great Recession as compared to today's S&P 500 forward PE multiple of 22x should raise eyebrows. https://soundcloud.com/ceorater