Posted on 11/24/2009 12:06:55 AM PST by TigerLikesRooster
S&P Removes "One Click" P/E
Gee, what are they trying to hide?
As I have repeatedly shown there was has been a "one click" P/E available for the S&P 500 - from S&P - basically forever.
Here's one (recent) example.
Well that's no longer "easily findable."
Indeed, now you have to compute it yourself, although they do make it somewhat easy - if you have Excel.
You have to sign up for a (free) account now, and then you can download the spreadsheets with quarterly numbers.
So I did.
The interesting part of this exercise is that you get annualized P/Es doing so for three years, and then you get the quarterlies going into the current period.
They show P/E for 2006 was 18.09, 21.65 for 2007, and a whopping 56.80 for 2008.
What is it now? On a 12-month trailing basis, 82.25, with nearly all of the S&P 500 now having reported third quarter (HP reports this afternoon.)
The "outlier" if you will, that is, Q4 of last year, rolls off after this quarter. It is ($23.13) and will disappear after the next quarterly report.
So let's assume a few things. First, that the 4th Quarter will track roughly with 3rd quarter, which has posted $15.24. This would give us a P/E of 21 - still radically expensive and roughly right where it was annually in 2007 before the market blew up!
Hmmmm.....
Earnings will continue to surprise to the upside eh? They better. I will note that historically bear markets have all bottomed with the P/E in single digits and dividend yield approaching 10%. A bear market bottoming with a P/E of 130 (as it was a couple months ago) and dividend yield around 2%?
That has never happened before.
You're free of course to continue to believe that earnings will accelerate to the upside. But one must ask - from where will that come from? A look inside the sectors shows that consumer discretionary is already producing near-peak earnings from 2007, staples are above (materially so) 2007 numbers, health care is well above 2007 as are information technology and utilities (the latter with one exception - for one quarter.)
Indeed, the entire premise of "accelerating earnings" appears to rest in three places - financials, industrials and materials.
Oh, this also assumes those sectors that have "achieved" their already-extraordinary (above peak) results won't lose any of their moxie either - that is, their firing of employees won't translate back into weaker purchasing power and thus lower sales (and profits.)
The more you look into these figures and prognostications the more unsustainable they appear.
Ping!
So basically they removed easy access to an important indicator of market trend information?
Why?
Other than creating a storm over why, what could they possibly gain from removing this information?
I don’t claim to know their reasoning, but my best guess would be that they don’t want investors finding out this:
“P/E of 130 (as it was a couple months ago) and dividend yield around 2%?”
That is like ripping down the freeway in a car with a head gasket about ready to blow.
Now this is sustainable information. However, very few will ever read it. Market will up today.
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