From the end of 2011 to the end of 2017 the S&P500 incraesed from 1258 to 2673 - 13% pa
Of the increase 26% came from earnings increase and the other 74% came from PE expansion. In other words its happier and happier punters paying more and more for a $ of earnings - lots more
Its that PE expansion that may be unwinding at the moment ....even though earnings are still increasing.
If the S&P500 goes back to the same PE it was in 2011 over this year it will end the year at about 1800 - 30% less than what it is at the moment
“ At the top of every bubble, everyone is convinced it's not yet a bubble.”
Bookmarks