- On average over the past century, according to an analysis conducted by Ned Davis Research, the S&P 500 has performed better when its EPS was lower than a year previously — not higher.

- Over the past year, the U.S. stock market’s P/E multiple (based on trailing 12 months’ GAAP EPS) has fallen to below 20 from more than 30. Had the multiple remained constant, the S&P 500 today would be 28% higher than a year ago. In fact, it is 6% lower.

- So if earnings aren’t going down, then the P/E multiple is to blame which means there are some companies out there with strong earnings that you could pick up at a real bargain in this environment.

To read more on this, click through the link below and make sure to play the audio. This week isn't ma read aloud but provides more context and data in the episode.

If you like what you read/hear, be sure to like and subscribe to never miss out on a post!

[https://cedargrovecapital.substack.com/p/the-real-reason-the-stock-market?s=w#details](https://cedargrovecapital.substack.com/p/the-real-reason-the-stock-market?s=w#details)

Side note, the intro music for the audio version is great :)

Nathan Worden

P/E multiple contraction is the main driver of falling share prices.

https://cedargrovecapital.substack.com/p/the-real-reason-the-stock-market?s=w#details

The Real Reason The Stock Market Is Down

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