Are trailing P/E's getting too high and dividend yields getting too low?.
While they are rationalized by using FORWARD PE's which determines the PE using the ESTIMATED next year's earnings on the current price, keep anchored to the past. Wall Street has a terrible track record of forecasting the future.
Their reliability is probably is about the same as a coin flip. You might make it in the MLB with a 500 average, but this is investing. If they are wrong at this point in the market, the stocks will be severely penalized should they not meet the numbers!
- The Dow Utility PE went from 23 last year to 39 this year! The current dividend yield is 1.35%. The lesson is not to chase yield at this higher price level.
- The S&P PE went from 24 to 26 and dividend yields went from 2.24 to 2.00. Yields are getting kind of light! The earnings yield (1/26) is pretty small for the risk exposure.
Stay safe.
