Currently, the S&P 500 (as of 7/11/16) is trading at 2,137 with
Q1 trailing reported earnings of $86.44. (
S&P Data)
This puts the current
trailing P/E ratio of the S&P at a rather lofty
24.72x.
We also know that forward returns from varying valuation levels are
significantly varied depending on when you start your investing. As
shown in the chart below, from current valuation levels, forward
returns from the market have been much closer to 2% rather than
8%.
Posted by sbaxman111 on 11th of Jul 2016 at 01:27 pm
Roberts has written numerous times, that I have seen, that
forward estimated earnings have been so unreliable on a historical
basis that trailing earnings, in his opinion, should be the basis
for these PE calculations.
Posted by sbaxman111 on 11th of Jul 2016 at 02:36 pm
Based on this Standard & Poors article, actual 2015
GAAP earnings were $86.47 leaving a PE ratio of 23.4. 2014 was
$102.31 for a PE of 20.1. You should not that Roberts referenced
his Q1 earnings stat came from S&P Data.
The chart is using reported earnings. You're citing earnings
estimates and then making an assumption on a two year average of
those estimates. That in no way makes the chart misleading.
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Roberts - PE ratios & future returns
Posted by sbaxman111 on 11th of Jul 2016 at 12:09 pm
S&P 500 Data is wrong
Posted by jdaswani on 11th of Jul 2016 at 12:44 pm
Above article is misleading.
2016 Ests $118.39
2017 Ests $135.42
Avg 126.58
That implies PE 16.9x 2yr avg multiple. Big difference from the 24x multiple quoted. My data is coming from Yardeni Research.
Roberts - PE ratios & future returns
Posted by sbaxman111 on 11th of Jul 2016 at 01:27 pm
Roberts has written numerous times, that I have seen, that forward estimated earnings have been so unreliable on a historical basis that trailing earnings, in his opinion, should be the basis for these PE calculations.
Ok Valid comment. 1 problem. S&P
Posted by jdaswani on 11th of Jul 2016 at 02:02 pm
Ok Valid comment.
1 problem. S&P 500 2015 EPS was $117.98, so trailing eps is 2140/117.98 or 18.2x not 24x
Roberts - PE ratios & future returns
Posted by sbaxman111 on 11th of Jul 2016 at 02:36 pm
Based on this Standard & Poors article, actual 2015 GAAP earnings were $86.47 leaving a PE ratio of 23.4. 2014 was $102.31 for a PE of 20.1. You should not that Roberts referenced his Q1 earnings stat came from S&P Data.
http://www.investorsfriend.com/s-and-p-500-index-valuation/
The chart is using reported
Posted by a_l_ on 11th of Jul 2016 at 01:04 pm
The chart is using reported earnings. You're citing earnings estimates and then making an assumption on a two year average of those estimates. That in no way makes the chart misleading.