I knew I wrote something about this before and now it's time to look at where we are:
To recap, in April SP500 index was earning at the rate of $63 per share per annum, compared with an "analyst expectation" of $90 at the time. Pretty wild eh?
Today, in AUGUST, SP500 index is earning at the rate of, get this, $50 per share per annum, compared with "analyst expectation" of $87.
In April, the P/E was 21x. Today we are clocking 25-26x easy. However dramatic the selloff you have seen, the fact remains that valuation simply has not kept up at all with reality.
None of these was intentional - no such thing as manipulation in the largest index in the face of the planet, no.
How to use this information?
Whenever the expectation and actual #s are pretty close to each other, that is when you say a bottoming process can occur. It is gonna be southward from here.
The right enemy
5 years ago