An Equity Restart
An Equity Restart
After suffering a relatively mild drawdown in March, the S&P 500 Index rallied close to an all-time high during the first half of April.
- Despite investor angst about energy prices and geopolitical risk, earnings expectations just keep rising. Forward-looking earnings per share growth for the next twelve months has jumped over 20% year-over-year (Fig. 1).
- Simultaneously, the S&P 500 Index has been basically flat since last fall, which has allowed the forward-looking P/E ratio to compress from 24 to about 21 today (Fig. 1).
Should investors take advantage of the recent rally to reduce exposure? To the extent that you are not overweight US large cap equities, our answer is no.
First, we’ll lean on history and remind everyone that all-time highs are usually good times to invest, not indicators of an imminent pull-back. Since 1989, investments made when the S&P 500 was within 2% of an all-time high outperformed investments made any other day over 1, 3, and 5 years horizons, and performed nearly as well over 10-year horizons (Fig. 2).
Second, we don’t see signs of economic deterioration from the war in Iran just yet. Inflation remains a concern, but overall the economy, exemplified by the optimism we see from corporate earnings, remains resilient.
Fig. 1: Next-twelve-month S&P 500 consensus earnings growth and P/E ratio
Source: Bloomberg, Mill Creek. As of 4/14/2026.
Fig. 2: S&P 500 performance around all-time highs
Source: Bloomberg, Mill Creek. As of 4/14/2026.
Disclosures & Important Information
Any views expressed above represent the opinions of Mill Creek Capital Advisers ("MCCA") and are not intended as a forecast or guarantee of future results. This information is for educational purposes only. It is not intended to provide, and should not be relied upon for, particular investment advice. This publication has been prepared by MCCA. The publication is provided for information purposes only. The information contained in this publication has been obtained from sources that
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