S&P 500's PE Ratio of 139 Isn't Sustainable
"For investors a PE ratio in the 25 to 30 range means it will be difficult to find bargains, as you cannot expect an expansion of the PE ratio to contribute a higher level on the S&P 500 index.
"For investors a PE ratio in the 25 to 30 range means it will be difficult to find bargains, as you cannot expect an expansion of the PE ratio to contribute a higher level on the S&P 500 index.
Moreover, there is a risk the S&P PE ratio could contract, causing the level of the S&P 500 index to fall.
A drop to 20 on the S&P 500 PE ratio gives us a high of 917 on the S&P 500, assuming earnings does not change from its forecast.
Going forward investors need to keep in mind that the risk of a PE ratio contraction is a possibility.
A rise in the S&P 500 PE ratio is unlikely"
No comments:
Post a Comment