As of the 30th of October 2009, the PER of the S&P is 138. And I'm not talking about the Operating-PER, which is meaningless. I am talking about the actual profits of the 500 top cap public companies in the US. And I am talking official figures from Standard And Poor's. [update on the 2009-11-30: S&P have changed their web site and don't seem to report that number anymore. I will have to calculate it myself from now on...]
So basically, the previous month chart and analysis still apply:
Is that the final equity bubble? Are we close to the end? Nobody can know for sure, but the odds are highly skewed toward a major collapse in the equity markets.Also note that all the "better than expected profits" and V-shaped recovery didn't help reduce the PER. The effect of smoke and mirrors won't last forever. It is going to crash down in an ugly way.
At the current PER (about 140) the value of the stock market would need to be divided by 20 — or decline by 95% — to reach a normal bottom on a bear market (that would mean the S&P 500 trading at about 50 !) or the total earnings of the 500 biggest US companies need to rise by 2,000%. Or anything in between.
For example you should have a decline of about 50% if the US companies increase their earnings 10 fold (i.e. by 1,000%). This is how realistic the current market is.
You can read the previous posts from this link.