The S&P 500 PE ratio is currently ~36. What would the PE be under old accounting rules?
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The S&P 500 PE ratio is currently ~36. What would the PE be under old accounting rules?
My guess is likely 45 plus. Biggest in US history. New accounting rules have caused the PEs to decrease. Just look at Berkshire Hathaway.
Re: The S&P 500 PE ratio is currently ~36. What would the PE be under old accounting rules?
I suspect it has much more to do with low interest rates.
An expected stock return of 8% looks a lot better if the alternative is bonds that are yielding 1% vs. 7%.
An expected stock return of 8% looks a lot better if the alternative is bonds that are yielding 1% vs. 7%.
Re: The S&P 500 PE ratio is currently ~36. What would the PE be under old accounting rules?
It would have to be lower. The changes to accounting rules are favorable to intangible assets.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
Re: The S&P 500 PE ratio is currently ~36. What would the PE be under old accounting rules?
https://www.multpl.com/s-p-500-pe-ratiomillennialinvestor wrote: ↑Sat Jun 12, 2021 5:34 pm My guess is likely 45 plus. Biggest in US history. New accounting rules have caused the PEs to decrease. Just look at Berkshire Hathaway.
Correct. 45
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Re: The S&P 500 PE ratio is currently ~36. What would the PE be under old accounting rules?
That link says the PE was only 25 in Jan. 2020. Crazy year and a half...Lee_WSP wrote: ↑Sat Jun 12, 2021 5:46 pmhttps://www.multpl.com/s-p-500-pe-ratiomillennialinvestor wrote: ↑Sat Jun 12, 2021 5:34 pm My guess is likely 45 plus. Biggest in US history. New accounting rules have caused the PEs to decrease. Just look at Berkshire Hathaway.
Correct. 45
Re: The S&P 500 PE ratio is currently ~36. What would the PE be under old accounting rules?
As Bogle would've said, the market is full of donut-y speculation.millennialinvestor wrote: ↑Sat Jun 12, 2021 6:07 pmThat link says the PE was only 25 in Jan. 2020. Crazy year and a half...Lee_WSP wrote: ↑Sat Jun 12, 2021 5:46 pmhttps://www.multpl.com/s-p-500-pe-ratiomillennialinvestor wrote: ↑Sat Jun 12, 2021 5:34 pm My guess is likely 45 plus. Biggest in US history. New accounting rules have caused the PEs to decrease. Just look at Berkshire Hathaway.
Correct. 45
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Re: The S&P 500 PE ratio is currently ~36. What would the PE be under old accounting rules?
Thea earnings data only goes to December 2020. But the price appears to be current. I would love to know what earnings have been so far in 2021.
Re: The S&P 500 PE ratio is currently ~36. What would the PE be under old accounting rules?
Nothing burger. Interest rates are at 0%. Call me when we get back to 5-6% with a PE of 36.millennialinvestor wrote: ↑Sat Jun 12, 2021 5:34 pm My guess is likely 45 plus. Biggest in US history. New accounting rules have caused the PEs to decrease. Just look at Berkshire Hathaway.
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Re: The S&P 500 PE ratio is currently ~36. What would the PE be under old accounting rules?
Nothing burger?mrspock wrote: ↑Sat Jun 12, 2021 7:18 pmNothing burger. Interest rates are at 0%. Call me when we get back to 5-6% with a PE of 36.millennialinvestor wrote: ↑Sat Jun 12, 2021 5:34 pm My guess is likely 45 plus. Biggest in US history. New accounting rules have caused the PEs to decrease. Just look at Berkshire Hathaway.
Interest rates are lower internationally with substantially smaller P/E.
Are exUS stocks an amazing value or are US stocks absurdly overvalued?
20% VOO | 20% VXUS | 20% AVUV | 20% AVDV | 20% AVES
Re: The S&P 500 PE ratio is currently ~36. What would the PE be under old accounting rules?
Both could be true, or not.Nathan Drake wrote: ↑Sat Jun 12, 2021 11:02 pmNothing burger?mrspock wrote: ↑Sat Jun 12, 2021 7:18 pmNothing burger. Interest rates are at 0%. Call me when we get back to 5-6% with a PE of 36.millennialinvestor wrote: ↑Sat Jun 12, 2021 5:34 pm My guess is likely 45 plus. Biggest in US history. New accounting rules have caused the PEs to decrease. Just look at Berkshire Hathaway.
Interest rates are lower internationally with substantially smaller P/E.
Are exUS stocks an amazing value or are US stocks absurdly overvalued?
Get rich or die tryin'
Re: The S&P 500 PE ratio is currently ~36. What would the PE be under old accounting rules?
The market begs to differ. So far it’s been international that’s been overvalued for quite a while.Nathan Drake wrote: ↑Sat Jun 12, 2021 11:02 pmNothing burger?mrspock wrote: ↑Sat Jun 12, 2021 7:18 pmNothing burger. Interest rates are at 0%. Call me when we get back to 5-6% with a PE of 36.millennialinvestor wrote: ↑Sat Jun 12, 2021 5:34 pm My guess is likely 45 plus. Biggest in US history. New accounting rules have caused the PEs to decrease. Just look at Berkshire Hathaway.
Interest rates are lower internationally with substantially smaller P/E.
Are exUS stocks an amazing value or are US stocks absurdly overvalued?
Complete utter, total, fulsome nothing burger. Sort of like the 22 day market crash last year (not equating to the pandemic, this obviously wasn’t), and whatever one comes next. Yawn.
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Re: The S&P 500 PE ratio is currently ~36. What would the PE be under old accounting rules?
That’s not how “valuation” works. If something is overvalued it means that it’s performance has done better than fundamentals suggest and will likely have a lower equity premium in the futuremrspock wrote: ↑Sat Jun 12, 2021 11:30 pmThe market begs to differ. So far it’s been international that’s been overvalued for quite a while.Nathan Drake wrote: ↑Sat Jun 12, 2021 11:02 pmNothing burger?mrspock wrote: ↑Sat Jun 12, 2021 7:18 pmNothing burger. Interest rates are at 0%. Call me when we get back to 5-6% with a PE of 36.millennialinvestor wrote: ↑Sat Jun 12, 2021 5:34 pm My guess is likely 45 plus. Biggest in US history. New accounting rules have caused the PEs to decrease. Just look at Berkshire Hathaway.
Interest rates are lower internationally with substantially smaller P/E.
Are exUS stocks an amazing value or are US stocks absurdly overvalued?
Complete utter, total, fulsome nothing burger. Sort of like the 22 day market crash last year (not equating to the pandemic, this obviously wasn’t), and whatever one comes next. Yawn.
20% VOO | 20% VXUS | 20% AVUV | 20% AVDV | 20% AVES
Re: The S&P 500 PE ratio is currently ~36. What would the PE be under old accounting rules?
Stay the course has turned into a litmus test around here. Posters forget that Bogle himself said that lowering equities in the face of extreme speculation (high P/E) is prudent.
Re: The S&P 500 PE ratio is currently ~36. What would the PE be under old accounting rules?
A PE of 45 is a nothing burger. Interesting. Is there a PE where it becomes a something burger?mrspock wrote: ↑Sat Jun 12, 2021 11:30 pmThe market begs to differ. So far it’s been international that’s been overvalued for quite a while.Nathan Drake wrote: ↑Sat Jun 12, 2021 11:02 pmNothing burger?mrspock wrote: ↑Sat Jun 12, 2021 7:18 pmNothing burger. Interest rates are at 0%. Call me when we get back to 5-6% with a PE of 36.millennialinvestor wrote: ↑Sat Jun 12, 2021 5:34 pm My guess is likely 45 plus. Biggest in US history. New accounting rules have caused the PEs to decrease. Just look at Berkshire Hathaway.
Interest rates are lower internationally with substantially smaller P/E.
Are exUS stocks an amazing value or are US stocks absurdly overvalued?
Complete utter, total, fulsome nothing burger. Sort of like the 22 day market crash last year (not equating to the pandemic, this obviously wasn’t), and whatever one comes next. Yawn.
Re: The S&P 500 PE ratio is currently ~36. What would the PE be under old accounting rules?
When interest rates normalize. This is a multi-dimensional problem, the surrounding context matters. PEs alone are useless.JBTX wrote: ↑Sat Jun 12, 2021 11:50 pmA PE of 45 is a nothing burger. Interesting. Is there a PE where it becomes a something burger?mrspock wrote: ↑Sat Jun 12, 2021 11:30 pmThe market begs to differ. So far it’s been international that’s been overvalued for quite a while.Nathan Drake wrote: ↑Sat Jun 12, 2021 11:02 pmNothing burger?mrspock wrote: ↑Sat Jun 12, 2021 7:18 pmNothing burger. Interest rates are at 0%. Call me when we get back to 5-6% with a PE of 36.millennialinvestor wrote: ↑Sat Jun 12, 2021 5:34 pm My guess is likely 45 plus. Biggest in US history. New accounting rules have caused the PEs to decrease. Just look at Berkshire Hathaway.
Interest rates are lower internationally with substantially smaller P/E.
Are exUS stocks an amazing value or are US stocks absurdly overvalued?
Complete utter, total, fulsome nothing burger. Sort of like the 22 day market crash last year (not equating to the pandemic, this obviously wasn’t), and whatever one comes next. Yawn.
But I’m all ears. What’s the alternate play here? Bonds? Bit coin? International equities? Market timing? Russian bearer bonds? All of the above?
Re: The S&P 500 PE ratio is currently ~36. What would the PE be under old accounting rules?
So at current interest rates, is there a PE that becomes a somethjng burger? 60? 80? 100?mrspock wrote: ↑Sat Jun 12, 2021 11:55 pmWhen interest rates normalize. This is a multi-dimensional problem, the surrounding context matters. PEs alone are useless.JBTX wrote: ↑Sat Jun 12, 2021 11:50 pmA PE of 45 is a nothing burger. Interesting. Is there a PE where it becomes a something burger?mrspock wrote: ↑Sat Jun 12, 2021 11:30 pmThe market begs to differ. So far it’s been international that’s been overvalued for quite a while.Nathan Drake wrote: ↑Sat Jun 12, 2021 11:02 pmNothing burger?
Interest rates are lower internationally with substantially smaller P/E.
Are exUS stocks an amazing value or are US stocks absurdly overvalued?
Complete utter, total, fulsome nothing burger. Sort of like the 22 day market crash last year (not equating to the pandemic, this obviously wasn’t), and whatever one comes next. Yawn.
Re: The S&P 500 PE ratio is currently ~36. What would the PE be under old accounting rules?
While I wouldn't and don't use the term nothing burger, the alternatives are very unattractive.JBTX wrote: ↑Sat Jun 12, 2021 11:58 pmSo at current interest rates, is there a PE that becomes a somethjng burger? 60? 80? 100?mrspock wrote: ↑Sat Jun 12, 2021 11:55 pmWhen interest rates normalize. This is a multi-dimensional problem, the surrounding context matters. PEs alone are useless.JBTX wrote: ↑Sat Jun 12, 2021 11:50 pmA PE of 45 is a nothing burger. Interesting. Is there a PE where it becomes a something burger?mrspock wrote: ↑Sat Jun 12, 2021 11:30 pmThe market begs to differ. So far it’s been international that’s been overvalued for quite a while.Nathan Drake wrote: ↑Sat Jun 12, 2021 11:02 pm
Nothing burger?
Interest rates are lower internationally with substantially smaller P/E.
Are exUS stocks an amazing value or are US stocks absurdly overvalued?
Complete utter, total, fulsome nothing burger. Sort of like the 22 day market crash last year (not equating to the pandemic, this obviously wasn’t), and whatever one comes next. Yawn.
Re: The S&P 500 PE ratio is currently ~36. What would the PE be under old accounting rules?
The energy sector had negative earnings in every quarter of 2020, other areas while maybe not negative took an earnings dive. If you're looking at trailing earnings for your P/E ratio you might be missing that forward expectations are for something better than 2020, and it doesn't take much to be better than 2020
Aside from earnings though, even the 'Book Value' multiples are relatively high... but then again, the tech heavy boom might explain some of that, the IT sector isn't big for heavy capital investment in 'property and plant' and things of 'book value'.
Aside from earnings though, even the 'Book Value' multiples are relatively high... but then again, the tech heavy boom might explain some of that, the IT sector isn't big for heavy capital investment in 'property and plant' and things of 'book value'.
Last edited by JoMoney on Sun Jun 13, 2021 12:35 am, edited 1 time in total.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
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Re: The S&P 500 PE ratio is currently ~36. What would the PE be under old accounting rules?
True. I believe it was in the dot-com bubble when he personally went from 75% equity AA to around 35%. Quite a market timer he was indeed
25% VTI | 25% VXUS | 12.5% AVUV | 10% AVDV | 2.5% VWO | 25% BND/SCHR/SCHP
Re: The S&P 500 PE ratio is currently ~36. What would the PE be under old accounting rules?
He certainly was, but he seems to have also decided that he'd won the game so thoroughly that he'd quit permanently at that point. He was quite long in years, but still went on to predict a similar crash around 2006/2007. But he would usually or always add the caveat that markets can stay overpriced for a while before reverting to the mean.ivgrivchuck wrote: ↑Sun Jun 13, 2021 12:34 amTrue. I believe it was in the dot-com bubble when he personally went from 75% equity AA to around 35%. Quite a market timer he was indeed
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Re: The S&P 500 PE ratio is currently ~36. What would the PE be under old accounting rules?
Some are much lower valuations, how are they unattractive? Just because they haven’t performed as well?Lee_WSP wrote: ↑Sun Jun 13, 2021 12:24 amWhile I wouldn't and don't use the term nothing burger, the alternatives are very unattractive.JBTX wrote: ↑Sat Jun 12, 2021 11:58 pmSo at current interest rates, is there a PE that becomes a somethjng burger? 60? 80? 100?mrspock wrote: ↑Sat Jun 12, 2021 11:55 pmWhen interest rates normalize. This is a multi-dimensional problem, the surrounding context matters. PEs alone are useless.JBTX wrote: ↑Sat Jun 12, 2021 11:50 pmA PE of 45 is a nothing burger. Interesting. Is there a PE where it becomes a something burger?mrspock wrote: ↑Sat Jun 12, 2021 11:30 pm
The market begs to differ. So far it’s been international that’s been overvalued for quite a while.
Complete utter, total, fulsome nothing burger. Sort of like the 22 day market crash last year (not equating to the pandemic, this obviously wasn’t), and whatever one comes next. Yawn.
They have similar expected returns yet are nearly half the price?
20% VOO | 20% VXUS | 20% AVUV | 20% AVDV | 20% AVES
Re: The S&P 500 PE ratio is currently ~36. What would the PE be under old accounting rules?
1) I'd love to see your crystal ball. Expected returns have a way of not meeting expectations one way or the other.Nathan Drake wrote: ↑Sun Jun 13, 2021 12:51 amSome are much lower valuations, how are they unattractive? Just because they haven’t performed as well?Lee_WSP wrote: ↑Sun Jun 13, 2021 12:24 amWhile I wouldn't and don't use the term nothing burger, the alternatives are very unattractive.
They have similar expected returns yet are nearly half the price?
2) even if we accept it as true, which alternatives are you suggesting? Risk adjusted returns are not great across the board.
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Re: The S&P 500 PE ratio is currently ~36. What would the PE be under old accounting rules?
ExUS, EM, SCVLee_WSP wrote: ↑Sun Jun 13, 2021 12:56 am1) I'd love to see your crystal ball. Expected returns have a way of not meeting expectations one way or the other.Nathan Drake wrote: ↑Sun Jun 13, 2021 12:51 amSome are much lower valuations, how are they unattractive? Just because they haven’t performed as well?
They have similar expected returns yet are nearly half the price?
2) even if we accept it as true, which alternatives are you suggesting? Risk adjusted returns are not great across the board.
20% VOO | 20% VXUS | 20% AVUV | 20% AVDV | 20% AVES
Re: The S&P 500 PE ratio is currently ~36. What would the PE be under old accounting rules?
So do I pay my 30% capital gains to make all this happen? Do I make this all back plus beat the S&P 500? You see, some of us have nearly everything in taxable so we can’t just shift things around with the flavor of the month without large tax consequences.
Honestly, let’s check back in 10 years and see if market timing based on PE ratios or me just sitting on my hands wins.
Re: The S&P 500 PE ratio is currently ~36. What would the PE be under old accounting rules?
Current PE is not meaningful given the artificially depressed earnings the last 12 months have due to pandemic related shutdowns. Forward PE is much more meaningful. Currently the S&P 500 forward PE for the next 12 months is 22. That means so long as earnings come in as estimated; prices could remain sideways through the end of the year and the current PE would drop from 36 to 22. You could have a 8% gain for the year and 14 point drop in PE.
Everyone forgets that both the "P" and the "E" are variables.
So many bogleheads seem convinced that the current market looks like 1999 or 2000. Yet the parallels instead are closer to 2010. The world has gone through a horrific crisis, well capitalized firms (like FANG....) have done very well. The US has responded with aggressive stimulus measures while the Eurozone's response was anemic at best. Meanwhile most EM's (and developed Asia) are facing at least another 6-12 months of dealing with the crisis before they can even think about serious recovery.
Whatever you think of the US market, given the alternatives it seems best set to thrive in the next couple years.
Everyone forgets that both the "P" and the "E" are variables.
Or neither. Maybe exUS stocks are a value trap and US stocks are fairly valued.Nathan Drake wrote: ↑Sat Jun 12, 2021 11:02 pm Are exUS stocks an amazing value or are US stocks absurdly overvalued?
So many bogleheads seem convinced that the current market looks like 1999 or 2000. Yet the parallels instead are closer to 2010. The world has gone through a horrific crisis, well capitalized firms (like FANG....) have done very well. The US has responded with aggressive stimulus measures while the Eurozone's response was anemic at best. Meanwhile most EM's (and developed Asia) are facing at least another 6-12 months of dealing with the crisis before they can even think about serious recovery.
Whatever you think of the US market, given the alternatives it seems best set to thrive in the next couple years.
Re: The S&P 500 PE ratio is currently ~36. What would the PE be under old accounting rules?
Forward PES always look much more attractive than historical. The E's aren't even comparable. One is net income the other is operating earnings.Alchemist wrote: ↑Sun Jun 13, 2021 2:04 am Current PE is not meaningful given the artificially depressed earnings the last 12 months have due to pandemic related shutdowns. Forward PE is much more meaningful. Currently the S&P 500 forward PE for the next 12 months is 22. That means so long as earnings come in as estimated; prices could remain sideways through the end of the year and the current PE would drop from 36 to 22. You could have a 8% gain for the year and 14 point drop in PE.
Everyone forgets that both the "P" and the "E" are variables.
Or neither. Maybe exUS stocks are a value trap and US stocks are fairly valued.Nathan Drake wrote: ↑Sat Jun 12, 2021 11:02 pm Are exUS stocks an amazing value or are US stocks absurdly overvalued?
So many bogleheads seem convinced that the current market looks like 1999 or 2000. Yet the parallels instead are closer to 2010. The world has gone through a horrific crisis, well capitalized firms (like FANG....) have done very well. The US has responded with aggressive stimulus measures while the Eurozone's response was anemic at best. Meanwhile most EM's (and developed Asia) are facing at least another 6-12 months of dealing with the crisis before they can even think about serious recovery.
Whatever you think of the US market, given the alternatives it seems best set to thrive in the next couple years.
https://insight.factset.com/sp-500-forw ... since-2002
It looks like the peak forward PE in Feb 2000 was 24, so we are approaching that.
Forward esrnings almost always exceed actual earnings. Some pretty interesting stats in here, ignoring it is from seeking alpha and obviously advocating market timing.
https://seekingalpha.com/article/442866 ... -pe-ratios
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Re: The S&P 500 PE ratio is currently ~36. What would the PE be under old accounting rules?
Maybe both are appropriately valued?Nathan Drake wrote: ↑Sat Jun 12, 2021 11:02 pmNothing burger?mrspock wrote: ↑Sat Jun 12, 2021 7:18 pmNothing burger. Interest rates are at 0%. Call me when we get back to 5-6% with a PE of 36.millennialinvestor wrote: ↑Sat Jun 12, 2021 5:34 pm My guess is likely 45 plus. Biggest in US history. New accounting rules have caused the PEs to decrease. Just look at Berkshire Hathaway.
Interest rates are lower internationally with substantially smaller P/E.
Are exUS stocks an amazing value or are US stocks absurdly overvalued?
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Re: The S&P 500 PE ratio is currently ~36. What would the PE be under old accounting rules?
Yes. They could be. If the market is pricing in a “safer” US equities, the expected return based on P/E will be significantly lowerbck63 wrote: ↑Sun Jun 13, 2021 4:42 amMaybe both are appropriately valued?Nathan Drake wrote: ↑Sat Jun 12, 2021 11:02 pmNothing burger?mrspock wrote: ↑Sat Jun 12, 2021 7:18 pmNothing burger. Interest rates are at 0%. Call me when we get back to 5-6% with a PE of 36.millennialinvestor wrote: ↑Sat Jun 12, 2021 5:34 pm My guess is likely 45 plus. Biggest in US history. New accounting rules have caused the PEs to decrease. Just look at Berkshire Hathaway.
Interest rates are lower internationally with substantially smaller P/E.
Are exUS stocks an amazing value or are US stocks absurdly overvalued?
20% VOO | 20% VXUS | 20% AVUV | 20% AVDV | 20% AVES
Re: The S&P 500 PE ratio is currently ~36. What would the PE be under old accounting rules?
Ex us has a pe of nearly forty or low thirties. Hardly much different. Emerging markets is riskier. And scv seems to have a negative pe.Nathan Drake wrote: ↑Sun Jun 13, 2021 1:15 amExUS, EM, SCVLee_WSP wrote: ↑Sun Jun 13, 2021 12:56 am1) I'd love to see your crystal ball. Expected returns have a way of not meeting expectations one way or the other.Nathan Drake wrote: ↑Sun Jun 13, 2021 12:51 amSome are much lower valuations, how are they unattractive? Just because they haven’t performed as well?
They have similar expected returns yet are nearly half the price?
2) even if we accept it as true, which alternatives are you suggesting? Risk adjusted returns are not great across the board.
Re: The S&P 500 PE ratio is currently ~36. What would the PE be under old accounting rules?
US is coming out of worst pandemic that led government to forcefully shut down the large part of the economy. The last similar one was in 1918. So, this is as close to ‘now is different’ case as one can get. US has a crisis now of UNDER capacity not overcapacity. People have money but unable to spend it for housing and goods due to supply chains disruptions. Hence, crazy prices on lumber, houses, etc.
We are so lucky that the whole thing did not blow up spectacularly and it could have been very very bad. Actually it demonstrated resiliency and ingenuity of the American business. Switching such a huge portion of business to remote work is short of miracle. Nobody would have believed it couple of years ago.
I remember how bad things seemed to be and were just a year ago. And now people are bidding up large houses 20% or more in nice neighbourhoods and new cars are not staying up at the lots for too long.
I do not see US economy go anywhere but up once supply chains are restored. Then PE will revert to more meaningful number.
I think I just convinced myself to keep buying VIIIX
We are so lucky that the whole thing did not blow up spectacularly and it could have been very very bad. Actually it demonstrated resiliency and ingenuity of the American business. Switching such a huge portion of business to remote work is short of miracle. Nobody would have believed it couple of years ago.
I remember how bad things seemed to be and were just a year ago. And now people are bidding up large houses 20% or more in nice neighbourhoods and new cars are not staying up at the lots for too long.
I do not see US economy go anywhere but up once supply chains are restored. Then PE will revert to more meaningful number.
I think I just convinced myself to keep buying VIIIX
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Re: The S&P 500 PE ratio is currently ~36. What would the PE be under old accounting rules?
PE is around 20Lee_WSP wrote: ↑Sun Jun 13, 2021 9:20 amEx us has a pe of nearly forty or low thirties. Hardly much different. Emerging markets is riskier. And scv seems to have a negative pe.Nathan Drake wrote: ↑Sun Jun 13, 2021 1:15 amExUS, EM, SCVLee_WSP wrote: ↑Sun Jun 13, 2021 12:56 am1) I'd love to see your crystal ball. Expected returns have a way of not meeting expectations one way or the other.Nathan Drake wrote: ↑Sun Jun 13, 2021 12:51 amSome are much lower valuations, how are they unattractive? Just because they haven’t performed as well?
They have similar expected returns yet are nearly half the price?
2) even if we accept it as true, which alternatives are you suggesting? Risk adjusted returns are not great across the board.
And even low 30s is dramatically less than 45
If there’s no risk then there’s no risk premium. If EM is riskier the expected return is higher
20% VOO | 20% VXUS | 20% AVUV | 20% AVDV | 20% AVES
Re: The S&P 500 PE ratio is currently ~36. What would the PE be under old accounting rules?
Which ETF? Per OP's point, the new accounting method paints a much rosier P/E picture.Nathan Drake wrote: ↑Sun Jun 13, 2021 10:03 am
PE is around 20
And even low 30s is dramatically less than 45
If there’s no risk then there’s no risk premium. If EM is riskier the expected return is higher
Let's look at IWM and VBR.
IWM has a negative P/E of -55.97 using the old method: https://www.etf.com/IWM#overview
It has a positive P/E of 22.57 using the new method: https://www.ishares.com/us/products/239 ... l-2000-etf
VBR has a negative P/E of -389.11 using the old method: https://www.etf.com/VBR#overview
And a positive P/E of 18.39 using the new method: https://ycharts.com/companies/VBR
Ex-US contains a lot of emerging market, has a Sharpe Ratio of .29 vs .53 and has historically severely lagged behind the S&P throughout it's 20+ year history with Vanguard. It's clearly a riskier fund. I asked for alternatives that were better on a risk adjusted basis.
Last edited by Lee_WSP on Sun Jun 13, 2021 10:21 am, edited 1 time in total.
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Re: The S&P 500 PE ratio is currently ~36. What would the PE be under old accounting rules?
It depends on what metric you want to use to determine Earnings. Regardless, they are far less than US TSMLee_WSP wrote: ↑Sun Jun 13, 2021 10:18 amWhich ETF? Per OP's point, the new accounting method paints a much rosier P/E picture.Nathan Drake wrote: ↑Sun Jun 13, 2021 10:03 am
PE is around 20
And even low 30s is dramatically less than 45
If there’s no risk then there’s no risk premium. If EM is riskier the expected return is higher
Let's look at IWM and VBR.
IWM has a negative P/E of -55.97 using the old method: https://www.etf.com/IWM#overview
It has a positive P/E of 22.57 using the new method: https://www.ishares.com/us/products/239 ... l-2000-etf
VBR has a negative P/E of -389.11 using the old method: https://www.etf.com/VBR#overview
And a positive P/E of 18.39 using the new method: https://ycharts.com/companies/VBR
Value stocks have extremely depressed earnings due to COVID; similar to almost everything in 2009 yet that was (in retrospect) a very good time to buy
You can’t use trailing 1 year data with a black swan event to say something is overvalued
20% VOO | 20% VXUS | 20% AVUV | 20% AVDV | 20% AVES
Re: The S&P 500 PE ratio is currently ~36. What would the PE be under old accounting rules?
Not true.Nathan Drake wrote: ↑Sun Jun 13, 2021 10:20 amIt depends on what metric you want to use to determine Earnings. Regardless, they are far less than US TSMLee_WSP wrote: ↑Sun Jun 13, 2021 10:18 amWhich ETF? Per OP's point, the new accounting method paints a much rosier P/E picture.Nathan Drake wrote: ↑Sun Jun 13, 2021 10:03 am
PE is around 20
And even low 30s is dramatically less than 45
If there’s no risk then there’s no risk premium. If EM is riskier the expected return is higher
Let's look at IWM and VBR.
IWM has a negative P/E of -55.97 using the old method: https://www.etf.com/IWM#overview
It has a positive P/E of 22.57 using the new method: https://www.ishares.com/us/products/239 ... l-2000-etf
VBR has a negative P/E of -389.11 using the old method: https://www.etf.com/VBR#overview
And a positive P/E of 18.39 using the new method: https://ycharts.com/companies/VBR
Value stocks have extremely depressed earnings due to COVID; similar to almost everything in 2009 yet that was (in retrospect) a very good time to buy
You can’t use trailing 1 year data with a black swan event to say something is overvalued
https://www.portfoliovisualizer.com/bac ... ion2_2=100
It clearly marches more or less in line with the S&P (even came out of March 2020 in slightly better , which is sort of obvious since they're both representative of the US market.
Unsure if this link will work, but it shows that it's been on a tear vs the S&P.
https://finance.yahoo.com/chart/IWM#eyJ ... J0In19fX0-
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Re: The S&P 500 PE ratio is currently ~36. What would the PE be under old accounting rules?
What’s not true?Lee_WSP wrote: ↑Sun Jun 13, 2021 10:24 amNot true.Nathan Drake wrote: ↑Sun Jun 13, 2021 10:20 amIt depends on what metric you want to use to determine Earnings. Regardless, they are far less than US TSMLee_WSP wrote: ↑Sun Jun 13, 2021 10:18 amWhich ETF? Per OP's point, the new accounting method paints a much rosier P/E picture.Nathan Drake wrote: ↑Sun Jun 13, 2021 10:03 am
PE is around 20
And even low 30s is dramatically less than 45
If there’s no risk then there’s no risk premium. If EM is riskier the expected return is higher
Let's look at IWM and VBR.
IWM has a negative P/E of -55.97 using the old method: https://www.etf.com/IWM#overview
It has a positive P/E of 22.57 using the new method: https://www.ishares.com/us/products/239 ... l-2000-etf
VBR has a negative P/E of -389.11 using the old method: https://www.etf.com/VBR#overview
And a positive P/E of 18.39 using the new method: https://ycharts.com/companies/VBR
Value stocks have extremely depressed earnings due to COVID; similar to almost everything in 2009 yet that was (in retrospect) a very good time to buy
You can’t use trailing 1 year data with a black swan event to say something is overvalued
https://www.portfoliovisualizer.com/bac ... ion2_2=100
It clearly marches more or less in line with the S&P (even came out of March 2020 in slightly better , which is sort of obvious since they're both representative of the US market.
Unsure if this link will work, but it shows that it's been on a tear vs the S&P.
https://finance.yahoo.com/chart/IWM#eyJ ... J0In19fX0-
Earnings of small value stocks were hit far harder than big tech and most of the S&P 500
20% VOO | 20% VXUS | 20% AVUV | 20% AVDV | 20% AVES
Re: The S&P 500 PE ratio is currently ~36. What would the PE be under old accounting rules?
I thought you were saying something else.Nathan Drake wrote: ↑Sun Jun 13, 2021 10:32 am
Earnings of small value stocks were hit far harder than big tech and most of the S&P 500
Okay, so you're agreeing that the P/E ratio (the speculative return as Jack Bogle calls it) for SCV is higher than the S&P 500.
This is a truism as I've already shown that SCV price has blown the 500 out of the water since March 2020 and even going back to January 2020 and as you have stated: earnings were hit harder than the 500.
So, putting that together, SCV's price to earnings has relatively skyrocketed along with the price of the basket of stocks.
It's clearly an everything bubble. Perhaps emerging markets is the panacea/vaccine/whatever. I don't know, I can't predict the future. All I know is that it's all very very expensive.
- William Million
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Re: The S&P 500 PE ratio is currently ~36. What would the PE be under old accounting rules?
Can't imagine anything more foolish than using PE (or PE10) to determine how much equities to hold. Like judging the outcome of a baseball game by the last at bat.
Re: The S&P 500 PE ratio is currently ~36. What would the PE be under old accounting rules?
I suggest you re-read Common Sense on Mutual funds chapter 2 by Jack Bogle.William Million wrote: ↑Sun Jun 13, 2021 10:55 am Can't imagine anything more foolish than using PE (or PE10) to determine how much equities to hold. Like judging the outcome of a baseball game by the last at bat.
Re: The S&P 500 PE ratio is currently ~36. What would the PE be under old accounting rules?
Oh wow. It's only been this high before during or after a crash. That's interesting.Lee_WSP wrote: ↑Sat Jun 12, 2021 5:46 pmhttps://www.multpl.com/s-p-500-pe-ratiomillennialinvestor wrote: ↑Sat Jun 12, 2021 5:34 pm My guess is likely 45 plus. Biggest in US history. New accounting rules have caused the PEs to decrease. Just look at Berkshire Hathaway.
Correct. 45
"The only thing that makes life possible is permanent, intolerable uncertainty; not knowing what comes next." ~Ursula LeGuin