Quick take: Based on the January S&P 500 average of daily closes, the Crestmont P/E is 102% above its arithmetic mean and at the 98th percentile of this fourteen-plus-decade monthly metric. The January valuation is the highest since February of 2001 during the Tech Bubble.
The 2011 article P/E: Future On The Horizon by Advisor Perspectives contributor Ed Easterling provided an overview of Ed's method for determining where the market is headed. His analysis was quite compelling. Accordingly, we include the Crestmont Research data to our monthly market valuation updates. See also his latest update: Understanding Secular Stock Market Cycles.
The first chart is the Crestmont equivalent of the Cyclical P/E10 ratio chart we've been sharing on a monthly basis for the past few years.
The Crestmont P/E of 28.5 is 102% above its average (arithmetic mean) and at the 98th percentile of this fourteen-plus-decade series.