Chris Trottier on Nostr: Today, someone told me that a stock market crash is imminent because the market has a ...
Today, someone told me that a stock market crash is imminent because the market has a high P/E ratio. So I took a look at the data.
Yesterday, the average P/E ratio for the NASDAQ was 39.1, which is certainly higher than the 10 year average of 29.4.
This is by no means the 10 year high. In 2016, the NASDAQ saw a P/E ratio of 106.54—that year saw no stock market crash.
But just as important is average Forward P/E of the NASDAQ. Right now, it’s 24.41. Again, that’s higher than average but by no means exceptionally high.
However, a high P/E ratio doesn’t necessarily mean the stock market is exuberant. It can also mean earnings have fallen and the market has yet to adjust.
Perhaps that’s what we’ve been seeing this year. The average NASDAQ EPS for the quarter ending June 30, 2024 was $0.38, a 29.63% decline year-over-year.
Yesterday, the average P/E ratio for the NASDAQ was 39.1, which is certainly higher than the 10 year average of 29.4.
This is by no means the 10 year high. In 2016, the NASDAQ saw a P/E ratio of 106.54—that year saw no stock market crash.
But just as important is average Forward P/E of the NASDAQ. Right now, it’s 24.41. Again, that’s higher than average but by no means exceptionally high.
However, a high P/E ratio doesn’t necessarily mean the stock market is exuberant. It can also mean earnings have fallen and the market has yet to adjust.
Perhaps that’s what we’ve been seeing this year. The average NASDAQ EPS for the quarter ending June 30, 2024 was $0.38, a 29.63% decline year-over-year.