S&P Forward PE Now Below Feb 2020 Level
On May 6th the forward PE of the S&P 500 fell to ~17.5x, now slightly lower than it was before covid came to town. It bottomed at ~13x in March 2020, but given how much uncertainty was floating around back then, I find it hard to believe it gets there again.

But, you never know. It reached similar levels in the back half of 2018 after the China fiasco. There is always uncertainty in the market, but it would do investors good to remind themselves that when the S&P traded at 23x forward earnings, it had no place to be trading there.

Drawdowns hurt, but this is a natural, and healthy, correction.

Benjamin Buchanan's avatar
What's been funny about this one is the extreme runs in speculative assets that preceded it. Anywhere you look something is in 50%+ drawdown. It is crazy how small the S&P drop is in comparison. I'm with you though - thrilled with the correction and think markets are healing. I'm old enough to remember being able to buy a CD with a 6% yield - life was simpler back then...I wish we'd go back to those rates levels stock market be damned, but long term I think the yields are driven by technology deflation and demographics - both of which point in one direction.
Reasonable Yield's avatar
@01core_ben Excellent point Ben
Joshua Simka's avatar
@01core_ben So would you be surprised to see the indices to fall even further?
Eric Messenger's avatar
Yup. People are going to learn to sell high or have the psychology to ride the waves eventually.
Joey Hirendernath's avatar
An important message to focus on recovery and hold on during the bumps.

“History provides a crucial insight regarding market crises: they are inevitable, painful and ultimately surmountable.”
Shelby M.C. Davis
Rihard Jarc's avatar
Do you happen to know what earnings growth is this forward P/E projecting for next year?

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