With the S&P 500 returning over +25% for the second year in a row, equity valuations have reached elevated levels at roughly 22x forward earnings.
However, as BofA Global Research points out, buying at the higher end of the valuation spectrum is typically beneficial for both equity and credit in the subsequent 6 months.
Further, as Ed Yardeni illustrates, while the S&P trades at 22x led by the Mag 7 names at 30x, small and mid-cap names are now close to their 25-year average of 16x earnings, so plenty of opportunity exists within the market.
November 13, 2024
With the S&P 500 returning over +25% for the second year in a row, equity valuations have reached elevated levels at roughly 22x forward earnings.
However, as BofA Global Research points out, buying at the higher end of the valuation spectrum is typically beneficial for both equity and credit in the subsequent 6 months.
Further, as Ed Yardeni illustrates, while the S&P trades at 22x led by the Mag 7 names at 30x, small and mid-cap names are now close to their 25-year average of 16x earnings, so plenty of opportunity exists within the market.