S&P still trading on the high side on trailing 12mo P/E basis. And yes, I know it's trailing......but notice how the companies reporting the last few days have "beating est" but are reducing forecasts.
Has no one heard of the Molodovsky Effect? It states that P/Eâs are high at the bottom of cycles because earnings have bottomed out. With all this talk about how P/E's are so high and equivalent to pre-Great Depression levels (Buffet keeps saying this too), I'm suprised no one is talking about the Molodovsky Effect. And isn't the market supposed to be a reflection of future expectations? Oh well...
Who knows where the market is headed. All I know is that credit spreads are narrowing, interest rates are low, and if we can avoid deflation, there may be chance to continue the move higher here (normal pullbacks aside). I'm not bullish, per se...just reporting what I see....
