Excellent analysis. Clearly agreement that valuation is high. Seems to agree with Goldman Sacks estimation of 3% annualized return over next 10 years. I wonder if pandemic impacts push up the CAPE ratio since a 10 year look back on earnings would include the pandemic.
Based on S&P 500 earnings estimates for 2026 from a Barron's article, the S&P 500 can grow by 10% from where it is right now in 2025 and end the year with a forward price to earnings ratio of 21. That's still high and who knows if earnings can grow as much as projected but not as scary as 38.
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