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Jul 30 2021

What Is The S&P 500’s “NORMAL” P/E Multiple? …20.2x Trailing EPS!

  • Jul 30, 2021

Since 1871, the U.S. stock market’s average, or normal P/E (price/earnings) valuation is 14.6x its trailing 12-month earnings per share (EPS). With the S&P 500 P/E currently above 28x, the stock market appears frighteningly overvalued relative to its 150-year history—this may eventually prove to be an accurate warning of a pending, catastrophic stock market event. Nobody knows for sure. However, using this long-term historical valuation as the “average” or “normal” benchmark for U.S. stocks should be weighed with some skepticism for two primary reasons.


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About The Author

James Paulsen / Chief Investment Strategist