Here are some screens that investors use. They are for the S&P 500 in February 2024 and are compared to their historical averages. (The numbers are from press reports at the time.) In February 2024 the S&P 500 and Dow were breaking records, with the S&P over 5000 for the first time and Dow over 30000:
| At Feb 10 | Historical 10-year | Historical 20-year | |
|---|---|---|---|
| Trailing P/E | 24.2 | 20.4 | Â 21.5 |
| Forward P/E | 20.4 | 18.0 | 16.6 |
| P/B | 4.2 | Â 3.3 | Â 2.8 |
| Equity Risk Ratio | Â 0.7 | Lowest in 2 decades | |
| PEG | 1.48 | 1.49 | 1.39 |
| CAPE | Â 33.4 | The historical average is 17.2. |
These screens indicate that, at the record prices at February 2024, the S&P is overpriced. But, the return on the index from February 2024 to February 2025 was 20.7%, though it’s not over ‘til it’s over.
There is a lot of danger in using these screens. For one, read the note with the web page entry for chapter 1, The S&P 500 as a Benchmark? Chapter 2 has other warnings.