Math is hard for true believers.
When I hear someone on CNBC or Bloomberg blathering about a stock market that is undervalued and has a long way to run, I actually hear the sound of Charlie Brown’s teacher. Wa Wa Wa.
Facts are facts. The fact is the stock market has only been more overvalued over the last 142 years in 1929 and 2000. In only 3% of the last 142 years has the P/E ratio of the market been this high or higher. The P/E is 79% above the 142 year average.
Those are the facts. The rest is just noise or lies. This time will surely be different. Right?
The Crestmont P/E of 24.7 is 79% above its average (arithmetic mean) of 13.8. This valuation level is similar to the 77% we see in the latest S&P Composite regression to trend update and higher than the 49% above mean for the Cyclical P/E10 (more here).
The Crestmont P/E of 24.7 puts the current valuation at the 97th percentile of this fourteen-decade series.