Alfred Lam, CFA, Senior Vice-President and Chief Investment Officer CI Global Asset Management
The S&P 500 Index moved aggressively following the 8.6% inflation print announced on June 10.
On a year-to-date basis, the index is 21.6% lower, even though corporate earnings have reached new highs. On forecast earnings of $225 for 2022, it is trading at a 16.6x price-to-earnings (P/E) multiple. This level is fair valuation from historical standards but low from recent memory.
The index is 67.0% higher from the COVID lows on March 23, 2020. However, it is only 10.3% higher from the pre-COVID high. Since then, corporate earnings of the S&P 500 Index constituents have grown significantly (from $157 in 2019 to $208 in 2021).
Also note markets had bottomed very quickly. While it was painful to go through, the S&P 500 Index bottomed in 33 calendar days in 2020 following a drawdown of 34%.
What caused the volatility?
Download the rest of Alfred’s commentary here >> June Portfolio Construction
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