Now I would like to show you a few charts that tells us why the US market valuation at this point is still much higher than where it ought to be. Look at the right hand chart below - you can see that the consensus next 12 months earnings remains rather optimistic despite the projected dip- far exceeding 10 year average despite a near depression market environment.
PE ratio remains around 19x , compare against 12-13x during GFC.
And LT PE nowhere near previous crisis lows (20s, 30s,80s, 08-09)
And equity risk premium relatively benign and hardly commensurating with the biggest economic crisis since the Great Depression.
