S&P 500 Performance and Valuation

Source: JP Morgan

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  1. rd commented on Jul 14

    I am always distrustful of valuation averages based on recent periods. It is pretty clear that stock market valuations undergo long periods of relatively high or low valuations. These periods can last 10-30 years. We have been in a high one over the past 20 years, so a 25 year average shows a high average, much above the historical norm. http://www.advisorperspectives.com/dshort/updates/Market-Valuation-Overview.php

    However, I have not seen anybody able to accurately predict when the valuations turn over and flip to the opposite trend. I think that is the big question about valuations right now – do we stay in the high zone or flip to the low zone in the near-future.

  2. Concerned Neighbour commented on Jul 14

    In addition to rd’s point above re: recency bias in the dataset (a period largely characterized by central bank pumping/puts), I believe these earnings are based on non-GAAP accounting. The GAAP P/E is higher, over 20 I believe.

    It is incredibly difficult, nigh on impossible to find good value anywhere in the US “market”. The central banks have done an excellent job at inflating just about everything. Value investing is dead until “markets” are no longer policy instruments, which I don’t expect to happen for years, perhaps decades.

    • Futuredome commented on Jul 14

      The central bank? lol. The central bank is irrelevant. I can find good value all the time. If you want to play it cheap, get out. You want to play it cheap and create intellectual fantasies.

    • Concerned Neighbour commented on Jul 14

      What a ridiculous comment.

      The central bank is irrelevant? Is this meant to be a satirical comment?

      As for your ability to find good value, I encourage you to try and find Graham stocks in the S&P 500. Have fun with that.

      I further encourage you to read this short article on median stock prices:


      Then, just for kicks, read Doug Short’s latest on market valuations:


      In short, not only is the broader “market” significantly overvalued, but there are few if any pockets of value, either.

      If your definition of “good value” are stocks with 20+ P/E’s, P/B > 3, and declining revenues, we’ll agree to disagree. For surely there are plenty of those out there right now.

      If anyone is creating intellectual fantasies, it is you.

  3. bear_in_mind commented on Jul 14

    This is an excellent example demonstrating the only ‘constant’ is change…

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