After the significant decline in price over the last 6 months, it may appear that the market is now a 'bargain'. The forward P/E (10-yr average 2009 - 2019 Price/Earnings Ratio) of the S&P 500 at a price of $4000 and EPS (Earnings Per Share) of $237.18 is 16.9. This is below the 5-year average (18) and equal to the 10-year average (16.90). However, the 5 and 10-year averages are heavily skewed by the pandemic surge in forward multiples which rose to over 23 in the back half of 2020 as investors, flush with stimulus cash and backed by historically accommodative monetary policy, bid up stock prices to historic levels.
