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Chief Market Strategist
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  Large-Caps Still Relatively Inexpensive Heading Into 2013
Posted Under: Broader Stock Market
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View from the Observation Deck

  1. The S&P 500 posted a total return of 15.99% in 2012. On average, the index returned 9.8% per year from 1926 through 2011, according to Ibbotson Associates/Morningstar.
  2. Despite the strong return in 2012, the S&P 500 closed the year 8.9% below its all-time high of 1565.15 on 10/9/07.
  3. Except for the S&P 500 Utilities Index, each of the major sector indices, as well as the S&P 500, all possess 12-month forward-looking estimated P/E ratios that are well below their 20-year averages (see chart).
  4. The S&P 500's estimated P/E is 13.19, significantly below its 20-year average of 19.86.
  5. Bloomberg estimates that the S&P 500's 2013 EPS growth rate will be 12.92%, as of 1/2/13.

This chart is for illustrative purposes only and not indicative of any actual investment. Investors cannot invest directly in an index. The S&P 500 is a capitalization-weighted index comprised of 500 stocks used to measure large-cap U.S. stock market performance.

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Posted on Thursday, January 3, 2013 @ 3:53 PM • Post Link Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
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