Yesterday, he pointed out that the PE ratio for the S&P 500 is now 19 times last year’s earnings per share. This is significantly above the long-run trend of 16.7, suggesting the market is now fully-valued, historically speaking. It is even more remarkable that the market is so fully-valued in the face of so many companies decreasing their future earnings, primarily due to the stronger dollar.
However, he is not calling for a market correction. Given the historically low interest rate environment, he believes that a higher PE ratio is justified . . . at least for now.
Of course, interest rates are going up, sooner or later. Yes, but earnings per share are also going up, sooner or later!
Stay the course . . . at least for now.