I’m not the only one saying the S&P 500 needs to drop. An article at My Budget 360 has some good information and analysis about P/E ratios and why they matter.
Some are arguing that the fair value of the S&P 500 should be somewhere around 440 if we take a multiple of 15 which would be in line with historical P/E ratios. That is a stunning number but makes sense. That means the S&P would need to fall an additional 330 points, a drop of 42% from where we are currently at. That is hard to imagine yet the math points us in that direction.
Check out the entire story – it’s good stuff.
gk
Filed under: Economy Tagged: | earnings, earnings estimates, Economy, S&P 500
