5 replies to this topic

[NAV]

http://www.traders-t...damental-folks/

 

Without the tax cuts, the current P/E is at obscene levels, at around 25. If the tax plan is implemented, assuming 20% tax rate, the P/E would drop from 25 to 16.9. 

 

 

Voila ! The current forward P/E is around 17.45. Last year, it was merely a projection. Now it's a fact. 

 

 

Now here's something to think about. Have you seen a major bull market top at fair valuations ? Nope. That means we are not going to top at a P/E of 17 but somewhere higher, much further away from the median.

 

At 16.9 P/E - S&P 2570 (Fair)

At 20 P/E - S&P  3034 (Overvalued)

At 25 P/E - S&P 3792 (Bubble territory)

 

I would wager that S&P will at least reach the overvalued territory, before this bull market ends.

 

 

I still stand by this. Whether it reaches overvalued or bubble territory, i don't know. Time will tell. But we will for sure reach at least the overvalued territory, before a 30% correction kicks in.

Edited by NAV, 18 July 2018 - 11:52 PM.

[bighouse1006]

Those numbers are a general consensus according to the amateur analysts on in the blogosphere.

[bighouse1006]

I do not read anything bearish anymore, every upside target is in the 3000-4000 for the SPX. Great it seems everyone will be right this time.

[Data]

The numbers are pro forma, or as-reported as they are called now since pro forma got a bad reputation for earnings manipulation.  GAAP P/E is much higher.  I've heard it's about 30-40 percent higher.

[OEXCHAOS]

I do not read anything bearish anymore, every upside target is in the 3000-4000 for the SPX. Great it seems everyone will be right this time.

 

In the middle of the trend, a whole lot of people are right.

 

Mark

[pdx5]

The biggest stimulus in the history of world with the recent tax cut (with no cuts in spending)

should keep the market bullish for several quarters adjusted for seasonality.

 

But there is a fly in this ointment over longer span of time. Which is that the current payments

on national debt are already at $1 Billion for every day of the year which is 365 days. Unless

the annual budget deficits turn lower, which is unlikely with the political climate in DC,

cost of servicing the debt plus the projected shortfalls in Medicare & Social Security means 

the US Treasury (UST) has to borrow more and more or print more and more. Will UST be

able to keep selling bonds without increasing interest rates much higher? Questionable!

 

But things look very good for the time being for bulls. Let the party roll on!!