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S&P 500 P/E Ratio still quite high

edited February 23 in Other Investing
As regards equity valuations, the Market should at some point revert back to historical norms.

P/E ratio is a simple metric, and some will dismiss it. But a -35% drop from here would not be that outrageous. If the Fed is busy tightening, can Powell still prop up equities? Punchbowl removal, Russian aggression, inflation, asset bubbles, etc.
The stage is set for a volatile 2022.


Current S&P 500 P/E Ratio: 24.1
(Feb 23, 2022)

Mean: 16.0
Median: 14.9

Comments

  • The Fed is responsible for a generation of punch-bowl drunks.
  • edited February 24
    The stock market has in recent years been more interested in receiving the Fed's continued support than about closely concerning itself with traditional valuation metrics (TINA). Related to that, Powell repeatedly indicated over the past couple of years the Fed would wait for clear signs inflation was more than a transient problem before it would act to counter it. He also repeatedly expressed confidence the Fed has adequate tools to successfully deal with it if necessary. The stock market is now questioning the adequacy of the Fed's tools and whether its continued confidence in the Fed can be justified. I am cautious at this point.
  • Volatility played out today on the downside this AM, followed by a whiplash rebound back into Tech stocks. Wild stuff, courtesy of a Russian dictator.

    Tough to take advantage of this using mutual funds, so equity ETFs with limit orders are the way to go.
  • edited February 24
    >> the Market should at some point revert back to historical norms.

    Dow 21,000 !! A new book idea.

    Made 4% trading QQQ today. If only it had a huge amount for this war profiteer.
  • When markets reopened following 9/11, I bought some company that sold x-ray machines for airports. I did feel my profit was somehow undeserved.
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