The forward price/earnings ratio for the S&P 500 has plunged. In a ‘normal’ environment, that level might attract value-oriented buyers, but the rub today is different, in the opinion of Liz Ann Sonders from Charles Schwab.
Key quotes
“Valuations are not likely to be a catalyst, at least not until the ‘E’ in the forward P/E finds its bottom.”
“Estimates have been coming down; but in my opinion, they have much further to go, at least for the second quarter.”
“Technicians can point to dramatically oversold conditions; but again, that may not be enough.”
“In terms of the stock market and advice for investors, don’t attempt to time a bottom, especially if you are making all-or-nothing investing decisions.”
“Market bottoms tend to be processes over time, not moments in time; just like investing should be a process over time; never about a moment in time. And remember, panic is not an investment strategy.”
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