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Stock Valuation Measures S&P500
Source: JP Morgan

It has become commonly accepted that stocks are very expensive, overbought and perhaps even in a bubble.

JPMorgan Chase & Co.’s latest quarterly chart book (you can download it here) takes issue with those conventions.

As you can see from the chart above, U.S. equity prices closely match their long-term average price-to-earnings ratio of 15.5. That’s precisely at fair value if you are comparing it to the Standard & Poor’s 500 Index earnings-per-share average of analyst estimates for the next 12 months. Continues here

Category: Digital Media, Valuation

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2 Responses to “How Expensive Are Stocks? (Not Terribly)”

  1. Stock Soup says:

    interestingly, the Russell 2000 is trading at 25x forward earnings, and that is bubble territory.

    i don’t know what to make of it

  2. NMR says:

    Commonly accepted by whom? TV chatterers? Newspaper headline writers? Republican and far leftist doomsayers? Unknown bloggers? Shorts? Crisis shoppers? Valuations (excluding the usual suspects) while elevated are not in bubble territory.