Quick take: Based on the June S&P 500 average of daily closes, the Crestmont P/E is now 90% above its arithmetic mean and at the 98th percentile of this fourteen-decade monthly metric.
The 2011 article P/E: Future On The Horizon by Advisor Perspectives contributor Ed Easterling provided an overview of Ed's method for determining where the market is headed. His analysis was quite compelling. Accordingly I include the Crestmont Research data to my monthly market valuation updates.
The first chart is the Crestmont equivalent of the Cyclical P/E10 ratio chart I've been sharing on a monthly basis for the past few years.
The Crestmont P/E of 26.3 is 90% above its average (arithmetic mean) of 13.9. This valuation level is similar to the 84% we see in the latest S&P Composite regression to trend update and higher than the 54% above mean for the Cyclical P/E10 (more here).
The latest Crestmont P/E puts the current valuation at the 98th percentile of this fourteen-decade series.
For a better understanding of these charts, please see Ed's two-part commentary here:
And these articles explore key concepts for investment expectations and planning.
- Nightmare on Wall Street: This Secular Bear Has Only Just Begun
- Game Changer: Market Beware Slower Economic Growth
- What "Secular Cycle" Means
Also, here links to the latest updates on Ed's Crestmont Research website.
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