Valuation

No Letup in the Valuation Meltdown

Jun 18, 2022 1 min read paid

The S&P 500’s forward P/E fell to 15.4 on Friday from just over 20.0 at the start of this year. That’s around the historical average for this valuation multiple. Lower readings typically have been associated with bear markets and recessions. The index fell into a bear market on Monday, but the jury is out on the recession call.

Ed Yardeni

A Short History Of Falling P/Es

May 23, 2022 1 min read paid

In the past, there have been dives in the S&P 500’s valuation multiple similar to the one so far this year: (1) The valuation deterioration in the early 1970s was associated with the devaluation of the dollar by President Nixon and the first of the decade’s two energy price shocks. Along the way, Franklin National blew up. Inflation was a protracted problem throughout the 1970s. (2)

Ed Yardeni

Forward P/Es Falling Faster Than Forward Earnings Are Rising

May 20, 2022 1 min read

The S&P 500/400/600 stock price indexes are down 18.1%, 16.1%, and 16.4% ytd through today's close.

Ed Yardeni

The Buffett Ratio Remains High

May 12, 2022 2 min read

The Buffett Ratio rose to new record highs at the end of last year. In the past, Warren Buffett has opined that the stock market was overvalued when the ratio of the market capitalization of US equites to nominal GDP rose to around 2.0 or higher.

Ed Yardeni

More Air Coming Out Of Valuation Multiples

May 7, 2022 2 min read

The air continued to come out of stock valuation multiples this past week. It has mostly been coming out of the S&P 500 Growth index’s MegaCap-8—i.e., Alphabet, Amazon, Apple, Meta, Microsoft, Netflix, Nvidia, and Tesla. Consider the following:

Ed Yardeni

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No Letup in the Valuation Meltdown

A Short History Of Falling P/Es

Forward P/Es Falling Faster Than Forward Earnings Are Rising

The Buffett Ratio Remains High

More Air Coming Out Of Valuation Multiples