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Re: There's One Missing Ingredient From The Market Rally 'Recipe'

By: Zimbler0 in POPE IV | Recommend this post (0)
Sat, 18 Mar 17 6:34 PM | 44 view(s)
Boardmark this board | POPES NEW and Improved Real Board 		Msg. 22904 of 47202
(This msg. is a reply to 22880 by capt_nemo)
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Nemo>
P/E = price to earnings!!!!! 30 means they think they are worth 30 times earnings...........Lil rich if ya ask me........... Mr. Green

>>>

Hmmm.
" The average P/E ratio since the 1870's has been about 16.7 "

This site is interesting. I'm going to post a couple of highlights from it.

>>>

*** Is the Stock Market Cheap? ***
by Jill Mislinski, 3/2/17

https://www.advisorperspectives.com/dshort/updates/2017/03/02/is-the-stock-market-cheap

Here is the latest update of a popular market valuation method using the most recent Standard & Poor's "as reported" earnings and earnings estimates and the index monthly average of daily closes for the past month. For the earnings, see the table below created from Standard & Poor's latest earnings spreadsheet.
•TTM P/E ratio = 23.8
•P/E10 ratio = 29.0

The Valuation Thesis

A standard way to investigate market valuation is to study the historic Price-to-Earnings (P/E) ratio using reported earnings for the trailing twelve months (TTM). Proponents of this approach ignore forward estimates because they are often based on wishful thinking, erroneous assumptions, and analyst bias.

. . . . .

As these examples illustrate, in times of critical importance, the conventional P/E ratio often lags the index to the point of being useless as a value indicator. "Why the lag?" you may wonder. "How can the P/E be at a record high after the price has fallen so far?" The explanation is simple. Earnings fell faster than price. In fact, the negative earnings of 2008 Q4 (-$23.25) is something that has never happened before in the history of the S&P 500.

. . . .

A cautionary observation is that when the P/E10 has fallen from the top to the second quintile, it has eventually declined to the lowest quintile and bottomed in single digits. Based on the latest 10-year earnings average, to reach a P/E10 in the high single digits would require an S&P 500 price decline well below 1000. Of course, a happier alternative would be for corporate earnings to continue their strong and prolonged surge. If the 2009 trough was not a P/E10 bottom, when might we see it occur? These secular declines have ranged in length from over 19 years to as few as three.

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(Entire article, with graphs, is at the link. Zim.)




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The above is a reply to the following message:
Re: There's One Missing Ingredient From The Market Rally 'Recipe'
By: capt_nemo in POPE IV
Sat, 18 Mar 17 7:09 AM 		Msg. 22880 of 47202

P/E = price to earnings!!!!! 30 means they think they are worth 30 times earnings...........Lil rich if ya ask me........... Mr. Green


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