Here’s a chart of the Forward PE on the S&P 500 going back to 1990. Recently, this key measurement of how expensive equities are has been going vertical. Using this ratio alone, at nearly 25x, the S&P 500 is more expensive now vs. any other time (since 1990) except 1998-2000 when this ratio hit 26x.
By no means will this dictate short-term price movements – but it very well may keep a lid on them in the medium-term unless earnings and guidance pick up in a meaningful way.
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