Extreme Valuations and Future Returns of the S&P 500

16 Pages Posted: 15 Jan 2021

See all articles by Shaun Rowles

Shaun Rowles

Independent

Andrew Mitchell

affiliation not provided to SSRN

Date Written: November 1, 2020

Abstract

Higher than average Price-to-Earnings (P/E) ratios and Cyclically-Adjusted Price-to-Earnings (CAPE) ratios have been tolerated by investors recently on the basis of low interest and inflation rates. This white paper analyzes what level of returns can reasonably be expected going forward from today’s elevated valuation multiples.

Keywords: Valuation, Price-to-Earnings, P/E, CAPE, Inflation, Interest Rates, Extreme Valuation, Low Interest Rates, Regression Analysis, S&P 500, Expected Returns

JEL Classification: E31, C51, B41, G11, G12, G00, G01

Suggested Citation

Rowles, Shaun and Mitchell, Andrew, Extreme Valuations and Future Returns of the S&P 500 (November 1, 2020). Available at SSRN: https://ssrn.com/abstract=3727447 or http://dx.doi.org/10.2139/ssrn.3727447

Andrew Mitchell

affiliation not provided to SSRN ( email )

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