In the May 5th issue of On My Radar, Steve Blumenthal provides his popular survey of current market valuation and 10-year forward returns forecast.
First, Steve offers a quick primer on valuation and price-to-earnings (P/E) in layman’s terms. Most investors (and even some financial advisors) don’t understand valuation methodologies and how median P/E works and what it tells us.
Steve presents a number of informative charts that advisors can use in their own valuation work and to discuss valuation and forward returns with their clients.
In sum, the broad market (i.e., S&P 500) remains very expensive and overvalued according to several metrics and 10-year forward returns are likely to be muted (0%-3% before inflation). Steve says, “We clearly find ourselves today in a high valuation and low potential forward return environment.” Click below to access the charts and Steve’s analysis!ON MY RADAR