Equity Investor Exuberance in Four Charts
Equity Investor Exuberance in Four Charts
- The S&P 500 has returned to an all-time high (Fig.1).
- The 12-month forward earnings estimates held up during April and have continued to rise since then (Fig. 2), but not as fast as prices.
- Accordingly, the 12-month forward price-to-earnings ratio is back to late-2024 highs (Fig. 3).
- As a reminder, all-time highs have historically been good entry points for the S&P 500 (Fig. 4).
Why it matters
Equity investors have moved past April’s tariff-induced angina and repriced equities for an optimistic future. While high valuations imply a headwind for returns over 7-10 years, they are not a useful indicator of return expectations over shorter periods. All-time highs have historically offered good entry points in US equity markets.
Fig. 1: S&P 500 Index
Source: Bloomberg, Mill Creek. As of 07/15/2025.
Fig. 2: S&P 500 12-month forward earnings expectations
Source: Bloomberg, Mill Creek. As of 07/15/2025.
Fig. 3: S&P 500 12-month forward price-to-earnings
Source: Bloomberg, Mill Creek. As of 07/15/2025.
Fig. 4: S&P 500 performance based on entry point
Source: Bloomberg, Mill Creek. 09/01/1989-07/15/2025.
Disclosures & Important Information
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