Valuation – Price-to-Forward Earnings Ratios The U.S. stock market maintains a premium valuation compared to global markets, with the exception of India, leaving little room for error as it’s priced for perfection. Image: Goldman Sachs Global Investment Research
U.S. Tech Media Telecom Valuations vs. ROE Investors are still willing to pay a premium for U.S. tech, media, and telecom stocks, and with robust returns on equity, those valuations look broadly justified. Image: Goldman Sachs Global Investment Research
Valuation – S&P 500 Normalized P/E Ratio At 22x, the S&P 500 is currently trading over 40% above the long-term average, which suggests that investors are willing to pay a premium for stocks in the index. Image: BofA US Equity & Quant Strategy
10-Year U.S. Treasury Yield Less CPI Given investors’ historic tendency to demand a 200 basis point premium over inflation rates, could rates rise further? Image: Morgan Stanley Wealth Management
S&P 500 ERP and S&P 500 Fwd vs. Trailing EPS The S&P 500 looks unattractive until the equity risk premium increases. Image: Morgan Stanley Research
Implied Volatility (VIX) and Realized S&P 500 Volatility (1-Month) According to Goldman Sachs, the volatility risk premium will return toward 2021’s highs in the coming weeks. Image: Goldman Sachs Global Investment Research
Valuation – 12-Month Forward P/E of Top vs. Bottom Quintile Does valuation still matter? The premium of the 20% most expensive companies is near highs. Image: Goldman Sachs Global Investment Research
Cross-Asset Valuations on their 10-Year Range Equity risk premiums suggest that equities are still cheaper than average. Image: Morgan Stanley Research
Relative P/E Valuation of Stable Growth vs. Variable Growth S&P 500 Companies Investors are paying a huge premium for stable growth S&P 500 companies vs. variable growth companies. Image: Goldman Sachs Global Investment Research
U.S. Rates Chart showing the dramatic plunge in interest rates over the past 10 months. On the positive side, the equity risk premium (ERP) is now higher. Image: Fidelity Investments
SELECT A STOCK MARKET FORECASTING MODEL STOCK MARKET VALUATION STOCK MARKET SHORT-TERM FORECAST STOCK MARKET EQUITY RISK PREMIUM STOCK MARKET EQUITY RISK PREMIUM STOCK MARKET BULL AND BEAR INDICATOR STOCK MARKET FORECASTING MODELS VS. US STOCK MARKET 95% CORRELATION, R² = 0.90 SINCE 1970 RECESSION INDICATORS LEADING INDICATORS