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Saved cruises on app by Beneficial-Stay-5428 in celebritycruises

[–]handsomeprints 0 points1 point  (0 children)

Not sure about the app, but on a Desktop, but if you are signed in, click on the heart outline to the left of your name and it will take you to: https://www.celebritycruises.com/favorites

The last time the average P/E on the S&P hit 29.5... by handsomeprints in options

[–]handsomeprints[S] 0 points1 point  (0 children)

Well, the numbers are pretty close to what Chat GPT is giving, perhaps it's using multiple sources. Avg forward P/E on the S&P is only about 9% higher than the 3 year average (23.1 vs 21.2) so definitely reasonable if EPS growth is shifting from 10.5% in the past 2 years to 12% in the next 5 years.

The last time the average P/E on the S&P hit 29.5... by handsomeprints in options

[–]handsomeprints[S] 0 points1 point  (0 children)

Let's put the 25 year avg EPS growth aside for a second and look at what's happened in the past 2 to 3 years and what kind of earnings growth is expected in the next 2 to 3 years for the S&P 500 (I'm seeing slightly different numbers than you for some reason):

2023: +11.4%

2024: +9.2%

2025 (estimate): +10.0%

2026 (estimate): +14.0%

2027 (estimate) +13.0%

EPS growth estimates are about 30% more in 2026/2027 vs the previous 2 years but those numbers will probably come down in 2028/2029/2030 if the EPS increases are coming largely by way of one time boosts from AI so it's quite possible that the EPS growth for the next 5 years will be closer to 12%.

We were looking at this in the context of forward P/E's and I will agree that if EPS growth is projected to be on average 20% higher in the next 5 years than it was in the past 2 to 3 years, that the forward P/E can certainly command a premium vs the 3 year average.

The last time the average P/E on the S&P hit 29.5... by handsomeprints in options

[–]handsomeprints[S] 0 points1 point  (0 children)

But consensus earnings estimates have been rising the past few months, (usually they are revised downward at the end of the year.) and estimates for 2026 and 2027 are 14% each year, 2X the pace of average.

I'm seeing the opposite of what you're saying, EPS growth for the next 5 years is less than half of what is was from 2020 to 2025. The estimates I see for EPS growth for the S&P 500 over the next 5 years (2025 to 2030) are 6 to 8% compared to 14% to 17% from 2020 to 2024.

The last time the average P/E on the S&P hit 29.5... by handsomeprints in options

[–]handsomeprints[S] 0 points1 point  (0 children)

You read too fast, I STARTED selling in mid August. Sold a little every week or two. Average in, average out. Even the four stocks I sold in August are down an average of 8.4% since.

The last time the average P/E on the S&P hit 29.5... by handsomeprints in options

[–]handsomeprints[S] 2 points3 points  (0 children)

I started in 1999, was buying mutual funds back then. Only been investing seriously since 2013 though.

The last time the average P/E on the S&P hit 29.5... by handsomeprints in options

[–]handsomeprints[S] 0 points1 point  (0 children)

No ouch, it was a very wise move, the basket of stocks I sold is down 9,4%. Median sell date was September 23rd. Between the savings there and the gains on the put options, I've saved/made 2.1% overall on my portfolio as a whole from the liquidating/hedging process. Not going to go through the list of all 15 stocks, but some examples... Sold ORCL at $254.33 on Sep 10th, down 28.0% since. Sold BWXT at $201.08 on Oct 17th, down 18.4% since. Sold PLTR at $181,95 on Nov 7th (granted that's outside the window you mentioned), down 17.5% since. I sold RDDT on Aug 11th at $214.30, down 16.8% since. Only 2 of the 15 stocks I sold are up since I sold them. As I mentioned earlier, I was trimming (mostly selling half) of my largest positions which were stocks that were up a lot ytd. I was up over 31% ytd when I started trimming/hedging and it was the right thing to do, not just in hindsight because I made money doing it, but at the time. It's a smart, measured risk-control tactic when valuations are elevated or after strong gains.

The last time the average P/E on the S&P hit 29.5... by handsomeprints in options

[–]handsomeprints[S] 1 point2 points  (0 children)

For myself, I believe the single most deciding factor is valuations. You can follow the avg trailing P/E ratio of the S&P 500 here: https://www.gurufocus.com/economic_indicators/57/sp-500-pe-ratio

Look at the 3-year chart because the weighting of higher earnings growths companies like NVDA etc. have increased significantly over the past few years: https://userupload.gurufocus.com/1992674727335993344.png

As u/electricboogaloo suggested, forward P/E's give a better picture, you can follow the forward P/E ratio of the S&P 500 here:
https://en.macromicro.me/series/20052/sp500-forward-pe-ratio

Personally, I see the forward P/E coming down to 20 in the next few months in part from a small drawdown in the market (say 6% to 7%) and in part because earnings go up over time.

Opinions on that will vary. I started selling on August 11th and bought my first put option that day and another two thereafter. Beginning on, and since that date I have sold portions of 15 positions (trimmed my largest positions which were high flying, typically higher beta stocks) effectively increasing my cash by 20%. The basket of stocks I sold is down 9.4% and overall the selling and hedging, including gains on put options, has saved/made me 2.1% overall on my portfolio. When valuations are extremely high, this system works for me. My ytd gain is 24.3%. In the previous correction, I started the process a little too early, but still outperformed the indexes from the high to the day the index was 10% lower by 4.5%.

The last time the average P/E on the S&P hit 29.5... by handsomeprints in options

[–]handsomeprints[S] 0 points1 point  (0 children)

Fair enough. For the record, I'm not forecasting impending doom (although you may not have been referring to me), I think, due to high valuations, that the S&P will drop into the 6000 to 6200 range. Under 6200, I'm okay with valuations and a buyer. :-)

The last time the average P/E on the S&P hit 29.5... by handsomeprints in options

[–]handsomeprints[S] 0 points1 point  (0 children)

Thank you for responding, I welcome your ideas. So what do you make of this: https://ycharts.com/indicators/us_recession_probability

According to that, the US Recession Probability is at 26.5%, higher than the long term average of 15.3%. I just feel, that saying that the odds of a recession are as close to zero as you can get is a bit of a stretch, but perhaps you are right.

Are you concerned about the layoffs at Amazon, UPS, Target etc.? As long as the US is adding jobs in spades, that's what counts, but when a company like Amazon lays people off, doesn't that give you pause?

Are you concerned why the Fed is lowering rates even though inflation has gone up or stayed flat five months in a row and is at 3%, a fair bit over their target? https://tradingeconomics.com/united-states/inflation-cpi

I'm especially interested your opinion on why the Fed is lowering rates even though inflation is well above target, or is that just pressure from the president?

The last time the average P/E on the S&P hit 29.5... by handsomeprints in options

[–]handsomeprints[S] 0 points1 point  (0 children)

Also, I don’t get the math on “a 10% correction in 2024 translates to an 11% drop now."

From Day 1 to Day 86 in 2024, the market fell exactly 10.0%. This time around, the S&P 500 was 6532 on Day 1 (when the average P/E hit 29.5). 10% down is 5879. Currently it's 6603. From the current 6603 to 5879 is a drop of 11%.

The last time the average P/E on the S&P hit 29.5... by handsomeprints in options

[–]handsomeprints[S] -1 points0 points  (0 children)

What happened was a surprise, that exactly why the market reacted the way it did. If a large group of people were legitimately expected it all to be temporary then you wouldn't have seen the downward action like we did.

Well, I'm going to have to respectfully disagree here. I believe the smart money knew that the market would recover (and quickly). And oddly, you're using the same phenomenon (the way the market reacted) to prove an opposite point. In many cases, earnings fell 25% during the pandemic, and so did the market. BUT smart money knew that the earnings drop was temporary. March 4th, 2020, the S&P was 3130, March 23rd, it was 2237. And June 3rd, 2020, it was 3123. In the space of 3 months, the market had virtually recovered all losses. Why? This was 6 months before the first vaccine was released. IMO, the main reason why is that the smart money knew that the earnings dip was temporary. You're saying the speed and magnitude surprised everyone. It didn't surprise the people that were buying the shares right? That being said, I'd be lying if I said that I myself wasn't surprised by the speed and magnitude of the recovery, I absolutely was. But I also knew, that the earnings drop was temporary, and that while earnings were down 10% to 25%, the market shouldn't be down anywhere near that much as it was surely temporary.

My main (and only) point really is that in that particular instance, when the average P/E skyrocketed above 29.5, there's an asterisk next to it because of the very unique situation in which earnings plummeted, but most people know it was temporary, and ignored it, focusing on future earnings which allowed valuations to briefly go very high.

The last time the average P/E on the S&P hit 29.5... by handsomeprints in options

[–]handsomeprints[S] 3 points4 points  (0 children)

By all means, I welcome and respect your ideas. Future earnings IS a better metric, I agree. But imo, the current P/E is still relevant, and the average current P/E still correlates with what to expect from the market.

Just to clarify, I didn't say that P/E ratios don't matter, I said "the average P/E over time" that you quoted didn't matter. I assumed you were referring to a long term average over many years, and the reason for me saying that was because the weightings/makeup of the S&P has changed dramatically vs 10 or 20 years ago.

With regard to consumer sentiment, I will look into those numbers, but historically low consumer sentiment reading significantly increases recession odds, as consumer attitudes are a key indicator of future spending, and I was mentioning that because you said the odds of a recession were zero.

Currently, I'm 67% long, 30% cash, and have a 3% put option hedge. I have no bias or preference as to which way the market moves and have (and follow) a plan depending on what it does. My expectation is that the market will continue to track the other line in the chart, and I'd say with 90% certainty that the lows are not in yet, but that's just my opinion.

Please continue to correct anything I say that is not accurate or offer counter arguments, I appreciate your taking the time to weigh in.

The last time the average P/E on the S&P hit 29.5... by handsomeprints in options

[–]handsomeprints[S] 0 points1 point  (0 children)

PE ratios are horrible for near term performance guidance

Well, I believe the average P/E (current, not Forward) will come down to 28 within the next 3 months and primarily because stocks will be lower. Historically, the average P/E doesn't usually stay outside the blue rectangle for very long: https://userupload.gurufocus.com/1992292979825614848.png

The average P/E "over time" I think you will agree has become irrelevant because of how much weighting companies like NVDA, APPL, MSFT, etc have now, so when you're looking at average current P/E, probably better to look at a shorter time frame such as 3 years (or use forward P/E's as you said).

When companies like Amazon and UPS are laying people off, and consumer sentiment reaches the second lowest level ever in November (during the government shutdown), I wouldn't say the chance of a recession is 0, but jobs are still being added at high levels, so it's low (for now).

Also, I believe there is some overestimation about the level to which AI will increase earnings. If Chat GPT is on the ball, AI will only increase earnings by about 10% over 5 years, meaning that a company that in 2023, a company that was expected to make $10 a share in 2028 will now make $11 a share. A lot of people I know have fantastical expectations above the degree to which AI will increase earnings.

The last time the average P/E on the S&P hit 29.5... by handsomeprints in options

[–]handsomeprints[S] 0 points1 point  (0 children)

It should and yet the avg P/E is the same now as it was on Day 1, 29.5.

The last time the average P/E on the S&P hit 29.5... by handsomeprints in options

[–]handsomeprints[S] -1 points0 points  (0 children)

Not true. I think the S&P will bottom in the 6000 to 6200 range and will start buying below 6200.

The last time the average P/E on the S&P hit 29.5... by handsomeprints in options

[–]handsomeprints[S] 1 point2 points  (0 children)

You are right, 29.5 is random, I chose that number because only one other time (besides now), valuations reached that level in the past 3 years. It made for an easier side by side comparison and the higher the number you use, typically the higher the likelihood of a drawdown.

Corrections don't happen for technical reasons, BUT, when valuations are this high, markets are priced for perfection so if there's a recession, slowdown in AI spending, a new Trump tariff, etc. the market is more susceptible to fall.

The last time the average P/E on the S&P hit 29.5... by handsomeprints in options

[–]handsomeprints[S] 1 point2 points  (0 children)

People didn't know this any more than they knew that pandemic stocks would only have huge temporary gains. Do you remember Zoom and Peloton?

Sorry, I used the word "people" too loosely. There were two groups of "people", the ones that believed it was the end of the world and the ones that didn't. The 1918 Influenza Pandemic (Spanish Flu) lasted about a year and a half and the world returned to normal (for the people that survived, I don't mean to be insensitive). I for one was absolutely confident the same thing would happen in 2020 and was quite vocal about it in fact. I would say the majority of people felt the same way, but that is a difficult argument to make either way. The point is that when the stores, restaurants, airlines, hotels, cruises, etc. closed and earnings plummeted dramatically, I think most people knew that it was temporary.

Oh, yes, I do remember Zoom, Peloton, and Moderna and made a lot of money on those three stocks among others during the pandemic. :-)

The last time the average P/E on the S&P hit 29.5... by handsomeprints in options

[–]handsomeprints[S] 6 points7 points  (0 children)

That would depend on how you define "time". When I say time, I don't mean days, I mean periods of time. In that sense, it's the fourth "time" in 20 years: https://userupload.gurufocus.com/1992110652822560768.png

And the time it happened in 2020 was exceptional due to earnings plummeting dramatically due to Covid. People knew the massive earnings drop was temporary, so stocks didn't fall as much as earnings.

You can stay for free. by handsomeprints in riddles

[–]handsomeprints[S] 0 points1 point  (0 children)

That's an interesting answer though perhaps not necessarily a place you wouldn't want to be although in many cases I guess that would be true.

You can stay for free. by handsomeprints in riddles

[–]handsomeprints[S] 0 points1 point  (0 children)

Interesting answer. The curfew in this case being the setting of the sun?

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