Excerpt from Yahoo Finance quoting DataTrek’s Nick Colas:
…. “With U.S. stocks continually climbing to fresh records, some investors have latched onto fears that valuations are rising to levels that could warrant a correction.
But according to DataTrek co-founder Nicolas Colas, stocks today aren’t as overvalued as they look.
Traditional measures of valuation including price-to-earnings (PE) ratios do suggest the S&P 500 is trading above its recent historical averages. The S&P 500’s current forward P/E ratio is 18.6x, or well above the 10-year average of 15.0x. However, a combination of a low interest rate backdrop and shifting company composition of the blue-chip index today helps make the case for today’s rich valuations, Colas said in a note Wednesday”….
Read the full article here on Yahoo Finance!