Quick take: Based on the February S&P 500 average of daily closes, the Crestmont P/E is now 80% above its arithmetic mean and at the 97th percentile of this fourteen-decade monthly metric.
The 2011 article P/E: Future On The Horizon by Advisor Perspectives contributor Ed Easterling provided an overview of Ed’s method for determining where the market is headed. His analysis was quite compelling. Accordingly I include the Crestmont data to my monthly market valuation updates.
The first chart is the Crestmont equivalent of the Cyclical P/E10 ratio chart I’ve been sharing on a monthly basis for the past few years.
The Crestmont P/E of 24.9 is 80% above its average (arithmetic mean) of 13.8. This valuation level is similar to the 76% 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 latest Crestmont P/E puts the current valuation at the 97th percentile of this fourteen-decade series.
