S&p 500 - p/e ratio

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Isabela
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S&p 500 - p/e ratio

Post by Isabela »

Hello all,
Where do u search for accurate p/e ratio for s&p 500? It is so many different numbers on internet...
Kind regards
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vineviz
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Re: S&p 500 - p/e ratio

Post by vineviz »

Isabela wrote: Mon Oct 03, 2022 7:03 am Hello all,
Where do u search for accurate p/e ratio for s&p 500? It is so many different numbers on internet...
Kind regards
There is not one “accurate” number for a company’s earnings: there are several slight different measures, with the appropriate choice depending on what you’re actually trying to do.

So, what do you want to do with a P/E ratio for this index?
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
MidwestMike
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Re: S&p 500 - p/e ratio

Post by MidwestMike »

I calculate it myself using the earnings here. Besides the trailing earnings I get future estimates.
Trance
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Re: S&p 500 - p/e ratio

Post by Trance »

Isabela wrote: Mon Oct 03, 2022 7:03 am Hello all,
Where do u search for accurate p/e ratio for s&p 500? It is so many different numbers on internet...
Kind regards
I usually just google "average p/e ratio S&P500" and google spits it out. Usually from ycharts I think?
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Escapevelocity
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Re: S&p 500 - p/e ratio

Post by Escapevelocity »

This is the best free resource that I am aware of (updated weekly). I reference cell H90 on the first tab which is PE based on calendar year 2022 earnings and current SP500 price.

https://www.spglobal.com/spdji/en/docum ... s-est.xlsx
Last edited by Escapevelocity on Mon Oct 03, 2022 10:21 am, edited 1 time in total.
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Taylor Larimore
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Re: S&p 500 - p/e ratio

Post by Taylor Larimore »

Isabela wrote: Mon Oct 03, 2022 7:03 am Hello all,
Where do u search for accurate p/e ratio for s&p 500? It is so many different numbers on internet...
Kind regards
Isabela:

I have held all my stocks in Vanguard's S&P 500 Index Fund for many years. I have no idea the fund's "p/e ratio. There are several methods for determining p/e ratios. In my opinion they are all immaterial for a "buy and hold" investor.

Best wishes.
Taylor
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burritoLover
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Re: S&p 500 - p/e ratio

Post by burritoLover »

P/E and CAPE10 metrics are effectively useless (potentially destructive) for any kind of decision-making involving a buy and hold properly diversified portfolio.
strummer6969
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Re: S&p 500 - p/e ratio

Post by strummer6969 »

It doesn't really matter for the buy and hold investor since you're buying when the PE is high and when it's low. It might be important if you're an active trader and investing in specific companies.

I wish I hadn't gone down the rabbit hole to be honest. It does the passive index investor little good and leaves them susceptible to sensationalism in the financial media.
Escapevelocity
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Re: S&p 500 - p/e ratio

Post by Escapevelocity »

All these pearls of wisdom are sage advice, but I don't think it does the OP any good to ignore their request for a reliable data source. For all we know OP, might be engaged in some academic research or something.
Last edited by Escapevelocity on Mon Oct 03, 2022 11:58 am, edited 1 time in total.
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Billy C
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Re: S&p 500 - p/e ratio

Post by Billy C »

The P/E on the S&P 500 fund is 19.8 according to Vanguard as of 8/31/22. This is based on reported earnings over the past year.

https://investor.vanguard.com/investmen ... omposition

For comparison the P/E on the Vanguard Tax-Managed Small Cap Fund is 11.4. This fund tracks the S&P 600 small cap index.

https://investor.vanguard.com/investmen ... omposition

I’m reinvesting dividends into the latter, hoping to use reversion to the mean. Time will tell how that works.
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Tamalak
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Re: S&p 500 - p/e ratio

Post by Tamalak »

Piggybacking on this, how do I find world PE ratio? I used to use Siblis research, but I'm concerned they may have stopped updating: https://siblisresearch.com/data/global-markets-pe/
Escapevelocity
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Re: S&p 500 - p/e ratio

Post by Escapevelocity »

Billy C wrote: Mon Oct 03, 2022 11:38 am The P/E on the S&P 500 fund is 19.8 according to Vanguard as of 8/31/22. This is based on reported earnings over the past year.

https://investor.vanguard.com/investmen ... omposition

For comparison the P/E on the Vanguard Tax-Managed Small Cap Fund is 11.4. This fund tracks the S&P 600 small cap index.

https://investor.vanguard.com/investmen ... omposition

I’m reinvesting dividends into the latter, hoping to use reversion to the mean. Time will tell how that works.
Yeah that was 8/31. At the current SP500 price of 3657, we stand around 17.5 on a trailing 12M earnings of $208
strummer6969
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Re: S&p 500 - p/e ratio

Post by strummer6969 »

Tamalak wrote: Mon Oct 03, 2022 11:46 am Piggybacking on this, how do I find world PE ratio? I used to use Siblis research, but I'm concerned they may have stopped updating: https://siblisresearch.com/data/global-markets-pe/
VXUS has a Weighted Average PE Ratio 11.63 https://ycharts.com/companies/VXUS

At the risk of sparking yet another international thread, I will say that VXUS has been cheap for a long time and perhaps it is cheap for a reason.
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burritoLover
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Re: S&p 500 - p/e ratio

Post by burritoLover »

strummer6969 wrote: Mon Oct 03, 2022 12:13 pm
Tamalak wrote: Mon Oct 03, 2022 11:46 am Piggybacking on this, how do I find world PE ratio? I used to use Siblis research, but I'm concerned they may have stopped updating: https://siblisresearch.com/data/global-markets-pe/
VXUS is has a Weighted Average PE Ratio 11.63 https://ycharts.com/companies/VXUS

At the risk of sparking yet another international thread, I will say that VXUS has been cheap for a long time and perhaps it is cheap for a reason.
Or maybe the US is relatively more expensive for no good reason. Attaching labels to these valuations is all non-sense.
Tamalak
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Re: S&p 500 - p/e ratio

Post by Tamalak »

strummer6969 wrote: Mon Oct 03, 2022 12:13 pm
Tamalak wrote: Mon Oct 03, 2022 11:46 am Piggybacking on this, how do I find world PE ratio? I used to use Siblis research, but I'm concerned they may have stopped updating: https://siblisresearch.com/data/global-markets-pe/
VXUS has a Weighted Average PE Ratio 11.63 https://ycharts.com/companies/VXUS

At the risk of sparking yet another international thread, I will say that VXUS has been cheap for a long time and perhaps it is cheap for a reason.
Thanks. That's at least different from Vanguard's VXUS PE which is 11.3.. so maybe it has a chance of being accurate (Vanguard reported VXUS PE around THREE the other week so I don't trust its numbers at all)

I just wish I could get historical PE data for VXUS or VT so I can compare the numbers.. seeing a one-time (and often not dated) number has limited use.
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Re: S&p 500 - p/e ratio

Post by nyclon »

Updated daily here for the SPY ETF which tracks the S&P 500
https://www.ssga.com/us/en/intermediary ... -trust-spy

As others note, there are several ways to calculate PE and this page has a few methods.
strummer6969
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Re: S&p 500 - p/e ratio

Post by strummer6969 »

burritoLover wrote: Mon Oct 03, 2022 12:22 pm
strummer6969 wrote: Mon Oct 03, 2022 12:13 pm
Tamalak wrote: Mon Oct 03, 2022 11:46 am Piggybacking on this, how do I find world PE ratio? I used to use Siblis research, but I'm concerned they may have stopped updating: https://siblisresearch.com/data/global-markets-pe/
VXUS is has a Weighted Average PE Ratio 11.63 https://ycharts.com/companies/VXUS

At the risk of sparking yet another international thread, I will say that VXUS has been cheap for a long time and perhaps it is cheap for a reason.
Or maybe the US is relatively more expensive for no good reason. Attaching labels to these valuations is all non-sense.
I agree. I'm just parroting the usual arguments against int'l (which I do not agree with).
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Isabela
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Re: S&p 500 - p/e ratio

Post by Isabela »

First of all thank you for reply and useful info. My question was informative nature, just to see how p/e ratio changed in history during downturns. I believe staying in market longterm will bring results. Anyway we don't have other choice than live below our means and invest as much as possible until FI. Will keep with investing as always, learn new skills, earn more and hope I win this little capital game as soon as possible. I'm very grateful to find this website early in life and have moderators(mentors) as Taylor and many others who are active on forum and keep reminding same old principles which will never change.
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Re: S&p 500 - p/e ratio

Post by iim7V7IM7 »

burritoLover wrote: Mon Oct 03, 2022 10:30 am P/E and CAPE10 metrics are effectively useless (potentially destructive) for any kind of decision-making involving a buy and hold properly diversified portfolio.
I agree in regard to investment decisions, but not with regard to withdrawal rate decisions. The Shiller CAPE 10 is informative in regard to the latter.
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Re: S&p 500 - p/e ratio

Post by sperry8 »

Isabela wrote: Mon Oct 03, 2022 7:03 am Hello all,
Where do u search for accurate p/e ratio for s&p 500? It is so many different numbers on internet...
Kind regards
You can get the P/E here: https://www.multpl.com/s-p-500-pe-ratio (and also the P/E 10 here https://www.multpl.com/shiller-pe/table/by-month)
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Re: S&p 500 - p/e ratio

Post by Nathan Drake »

burritoLover wrote: Mon Oct 03, 2022 10:30 am P/E and CAPE10 metrics are effectively useless (potentially destructive) for any kind of decision-making involving a buy and hold properly diversified portfolio.
Incorrect
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burritoLover
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Re: S&p 500 - p/e ratio

Post by burritoLover »

Nathan Drake wrote: Tue Oct 04, 2022 9:09 am
burritoLover wrote: Mon Oct 03, 2022 10:30 am P/E and CAPE10 metrics are effectively useless (potentially destructive) for any kind of decision-making involving a buy and hold properly diversified portfolio.
Incorrect
There's boatloads of studies analyzing market timing allocation decisions based on CAPE10 that shows that it is fruitless. There is a relationship between valuations and returns but that is only seen in hindsight when including all the data through the period you were trying to predict.
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Re: S&p 500 - p/e ratio

Post by Nathan Drake »

burritoLover wrote: Tue Oct 04, 2022 9:30 am
Nathan Drake wrote: Tue Oct 04, 2022 9:09 am
burritoLover wrote: Mon Oct 03, 2022 10:30 am P/E and CAPE10 metrics are effectively useless (potentially destructive) for any kind of decision-making involving a buy and hold properly diversified portfolio.
Incorrect
There's boatloads of studies analyzing market timing allocation decisions based on CAPE10 that shows that it is fruitless. There is a relationship between valuations and returns but that is only seen in hindsight when including all the data through the period you were trying to predict.
If you have a willingness to take risk and CAPE shows an inadequate expected return, then you can certainly adjust your portfolio to take more risk based on valuations and expected returns

It’s only worthless as a short term timing mechanism, and as with any risk it may show up over the long term so obviously there’s no guarantees
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Re: S&p 500 - p/e ratio

Post by whodidntante »

There are many ways to calculate it, all wrong. I just look at IVV page on Blackrock's iShares site to get an idea. Blackrock seems to be relatively sane and does not have the inexplicable blowouts like Morningstar, etf.com and other sources I have looked at.
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Re: S&p 500 - p/e ratio

Post by Weathering »

If you are going to make a decision regarding the entire S&P500 based on its PE, then also consider how you could invest in most of the S&P500 while achieving a lower PE. For example, if the overall PE for the S&P500 is 19, then you could hold the S&P500 while also shorting TSLA (a member of the S&P500 with a higher than average PE @ 93) to achieve a "near S&P500" with a lower PE. I am not recommending this (because it essentially attempts to turn the S&P500 into a value index) but letting you know that if PE is your only criterion, then you may miss out on investing in high-growth companies.

Personal note: I would like to hold the S&P500 without including TSLA (due to management concerns) in the index but then I would be stock picking, so I don't.
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Re: S&p 500 - p/e ratio

Post by vineviz »

Nathan Drake wrote: Tue Oct 04, 2022 9:55 am
burritoLover wrote: Tue Oct 04, 2022 9:30 am
Nathan Drake wrote: Tue Oct 04, 2022 9:09 am
burritoLover wrote: Mon Oct 03, 2022 10:30 am P/E and CAPE10 metrics are effectively useless (potentially destructive) for any kind of decision-making involving a buy and hold properly diversified portfolio.
Incorrect
There's boatloads of studies analyzing market timing allocation decisions based on CAPE10 that shows that it is fruitless. There is a relationship between valuations and returns but that is only seen in hindsight when including all the data through the period you were trying to predict.
If you have a willingness to take risk and CAPE shows an inadequate expected return, then you can certainly adjust your portfolio to take more risk based on valuations and expected returns

It’s only worthless as a short term timing mechanism, and as with any risk it may show up over the long term so obviously there’s no guarantees
Agreed. There's a lot of room between "powerful tool for short-term market timing" and "effectively useless for any kind of decision-making".

While I do think most investors could successfully create a financial plan without explicitly incorporating valuation measures into their decision-making, that doesn't mean that valuation can't improve that decision-making at all.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
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Re: S&p 500 - p/e ratio

Post by burritoLover »

vineviz wrote: Tue Oct 04, 2022 10:26 am
Nathan Drake wrote: Tue Oct 04, 2022 9:55 am
burritoLover wrote: Tue Oct 04, 2022 9:30 am
Nathan Drake wrote: Tue Oct 04, 2022 9:09 am
burritoLover wrote: Mon Oct 03, 2022 10:30 am P/E and CAPE10 metrics are effectively useless (potentially destructive) for any kind of decision-making involving a buy and hold properly diversified portfolio.
Incorrect
There's boatloads of studies analyzing market timing allocation decisions based on CAPE10 that shows that it is fruitless. There is a relationship between valuations and returns but that is only seen in hindsight when including all the data through the period you were trying to predict.
If you have a willingness to take risk and CAPE shows an inadequate expected return, then you can certainly adjust your portfolio to take more risk based on valuations and expected returns

It’s only worthless as a short term timing mechanism, and as with any risk it may show up over the long term so obviously there’s no guarantees
Agreed. There's a lot of room between "powerful tool for short-term market timing" and "effectively useless for any kind of decision-making".

While I do think most investors could successfully create a financial plan without explicitly incorporating valuation measures into their decision-making, that doesn't mean that valuation can't improve that decision-making at all.
What specific decisions involving a portfolio would be improved by looking at P/E or CAPE10? At best maybe 1/CAPE10 could be used as a a generic placeholder for expected return as far as long-term planning but trying to use that as some guaranteed or highly probable predictor, it is effectively useless.
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Re: S&p 500 - p/e ratio

Post by Logan Roy »

burritoLover wrote: Tue Oct 04, 2022 11:34 am
vineviz wrote: Tue Oct 04, 2022 10:26 am
Nathan Drake wrote: Tue Oct 04, 2022 9:55 am
burritoLover wrote: Tue Oct 04, 2022 9:30 am
Nathan Drake wrote: Tue Oct 04, 2022 9:09 am

Incorrect
There's boatloads of studies analyzing market timing allocation decisions based on CAPE10 that shows that it is fruitless. There is a relationship between valuations and returns but that is only seen in hindsight when including all the data through the period you were trying to predict.
If you have a willingness to take risk and CAPE shows an inadequate expected return, then you can certainly adjust your portfolio to take more risk based on valuations and expected returns

It’s only worthless as a short term timing mechanism, and as with any risk it may show up over the long term so obviously there’s no guarantees
Agreed. There's a lot of room between "powerful tool for short-term market timing" and "effectively useless for any kind of decision-making".

While I do think most investors could successfully create a financial plan without explicitly incorporating valuation measures into their decision-making, that doesn't mean that valuation can't improve that decision-making at all.
What specific decisions involving a portfolio would be improved by looking at P/E or CAPE10? At best maybe 1/CAPE10 could be used as a a generic placeholder for expected return as far as long-term planning but trying to use that as some guaranteed or highly probable predictor, it is effectively useless.
I've always stood by this – as there are so many other factors that would determine 'fair value', such as growth, rates, inflation, etc. that one could go into unending detail trying to factor in. And it's probably sensible to assume the gargantuan market supercomputer is doing that in a fair bit more detail than a retail investor looking at a PE ratio.

However ... I do think at extremes, relative stock and bond valuations probably should be factored into asset allocation. e.g. By 1999, Treasuries yielded 3x more than the US stock market; and more recently, Treasuries became about 3x more expensive than stocks (as prices became detached from fundamentals –> the Fed wasn't buying treasuries for the reasons active managers do). So in both cases, it was questionable whether it made sense to keep buying at these relatively stretched prices. If people want to keep buying Treasuries on deeply negative real yields, with all this duration risk, it's questionable whether markets are still behaving rationally. That's maybe what extremes can indicate – at least moments when markets are becoming excessively speculative.
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Re: S&p 500 - p/e ratio

Post by MarkRoulo »

Isabela wrote: Mon Oct 03, 2022 7:03 am Hello all,
Where do u search for accurate p/e ratio for s&p 500? It is so many different numbers on internet...
Kind regards
I don't have a specific source to recommend, but if you care enough about this to search for a good source you need to understand that there are at least TWO separate choices that the P/E calculation can make. This leads to four separate P/E values and it is important that you not compare two values computed differently with each other :-)

Very broadly, your two decisions are:
  • Historical (usually last 12 months) earnings or projected/expected earnings (usually next 12 months)
  • Losses retained or losses excluded
The first is easy to understand: Do you want to look at the *measured* last 12 months, or use the (guesstimated) earnings for the next 12?

The second is a bit trickier. The difference is illustrated by deciding what the total earnings are for two companies, one of which has $100M in earnings and one of which has $40M in losses. If the earnings are computed by retaining the losses, then the overall earnings are $60M. If losses are excluded then the overall earnings are $100M.

Please keep these two decisions in mind when you look for P/E ratios.

But you ALSO should realized that accounting earnings are often NOT what normal people think of as earnings. The best illustration of this is that in 2002 AOL Time Warner reported an annual loss of almost $100 billion. the AOL Time Warner treasury wasn't short by that much cash compared to the year before, but the company still reported that loss. Keep this in mind when you are thinking about a ratio with earnings as one of the terms.
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