Wednesday, November 15, 2006

S&P 500 P/E Still About 17, same as 4 Years Ago

This is good news.

In another Bloomberg story, via the always interesting and useful The Kirk Report (yes, by the way, the Unknown Advisor does read other things and see other websites!) The S&P 500 is still valued at about 17 times trailing earnings per share, just about where it was four years ago at the beginning of the current bull market.

Noteworthy, that's what it is. Earnings have grown and kept pace with the run-up of share prices, overall , during the bull market. My working conclusion, to this point: The bull market is intact, and probably not ready to quit for a good bit yet.

Remember, this was the P/E relative to trailing earnings, not projected or forecast earnings. It would be a lot easier to question a P/E based on forecast earnings.

The Unknown Advisor is not into market predictions, nor is he into short-term trading or technical analysis! If the economy is growing, (and it is, albeit not a strongly,) and if stocks are not priced at high multiples relative to historical valuation ranges, then why the angst in so much of what you read and hear?

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