S&P 500 Overvalued by 100 Percent: Estimated Price-Earnings Inflation Adjusted Ratio does not Reflect Actual Earnings. VIX now Back to August 2007 Levels. Bank of America P/E Ratio over 500?
December 10, 2009 @ 10:58 am
It is hard to justify the 1,100 mark for the S&P 500. The 676 low of March, as disastrous as it may have felt, actually reflected a more accurate measure of earnings potential of the 500 S&P companies. The S&P 500 is a good index because it measures 500 companies with a current collective market cap of $9.6 trillion. The S&P 500 over a century of data has seen price to earnings ratios of between 5 and 10 after severe contractions. It is safe to say that what we are experiencing is a strong contraction.