(11-18-2024, 08:56 AM)The Real Marty Wrote:

(11-17-2024, 01:41 PM)Jag149 Wrote: I agree there are reasons for concerned.  This is why we cannot continue the direction we are going. Disruptors are needed in government as the entrenched administrators have proved to not be capable of doing anything significant.

Stocks historically have been valued on average around 18 times earnings. Currently they are at 21-22 times earnings. Fortunately there are only a handful of stocks that are pulling that average higher. They are cyclical semi conductor type stocks due to the push for AI. On the other hand we did have a 4 year period where inflation was 20% and  trillions of dollars were printed.  18*20% = 3.6. add that to the 18 and you have 21.6. A very simplistic approach.

Things should be ok as long as the default rate doesn't dramatically increase. It has moved a little in the last month but we need unemployment to stay low for this to work. The Fed has a duel mandate from congress to get to 2% (they are not there) and full employment. They foresaw the softening labor market despite the over inflated Jobs numbers reported by the current administration. They actually were the ones that forced the reduction of 880,000 in the report by saying they don't use the report. This caused the Fed to cut the rate by .50 instead of .25.

The current PE ratio of the total US stock market is 27.21.  

United States Stock Market: current P/E Ratio


The S&P 500 is at 27.87.

S&P 500 P/E Ratio Quarterly Trends: S&P 500 Earnings | YCharts

My bad I was referencing Forward P/E.  While I use Trailing P/E, I am investing for the future.  Since the election, stocks have surged dramatically and are reflect here a bit. I truly expect a pull back. So I have been taking advantage and trimming everything. That said, like you I feel the market is over valued especially with the pipe bomb of the growing federal debt.  It is going to be somewhat a double whammy. Refinancing maturing debt at higher interest rates combined with the new debt created.

Dow Jones Industrial Average   
Current or trailing 27.4 
A year ago 25.42
Forward P/E   22.32

S&P 500 Index 25.65 19.69 24.63
Current or trailing 25.65
A year ago 19.69
Forward P/E   24.63

NASDAQ 100 Index               
Current or trailing 33.37
A year ago 29.27
Forward P/E   31.27

https://www.barrons.com/market-data/stocks/us/pe-yields

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