After today’s closure, the P/E Ratio of SP500 is about to become the 2nd All Time High – 46.92 as per WSJ: https://www.wsj.com/market-data/stocks/peyields
We all remember how the market behaved in 2002 and 2009. I am sure it will be different this time.
On the other hand, in order to normalize the ratio and return to the 25.27 average:
– SP500 price needs to correct: 100% – 25.27/46.92 = 46%,
– SP500 earnings need to grow: 46.92/25.27 – 100% = 86%
“As of today, the S&P 500 is reporting year-over-year growth in revenues of 2.7%, compared to year-over-year growth in revenues of 1.6% last week and year-over-year growth in earnings of 0.1% at the end of the fourth quarter. Feb. 5, 2021″