The moment of peak panic came in March, just as it had for the FTSE indices. Start saving for your child's future with our Stocks & Shares Junior ISAs. Yet the market is up. In particular, the content does not constitute any form of advice, recommendation, representation, endorsement or arrangement by FT and is not intended to be relied upon by users in making (or refraining from making) any specific investment or other decisions. Things go in cycles and maybe at the moment, the cycle is swinging in the direction of the FTSE 100. I might hold more cash, but I might just keep my cash levels below 5% which is my usual target. Looking forward to it. Spread between top and bottom quintile of 12M forward PEs within FTSE USA Index. A glorified yellow pages is ‘high tech’? The FTSE has nothing in this space and neither does Europe – especially since ARM was sold to Softbank in the UK’s case, and in Europe it seems Wirecard was a scam in the one large fintech that Germany held — the rest of the industries are being slowly and possibly soon to be rapidly superseded. Very informative and interesting article which has certainly made me wonder if my global allocation is positioned correctly. Hi LR, that is indeed the bull case. I can list so many other quality companies with PE in the range of 40+. We see this impact in measures of dispersion between the top and bottom quintile of US PE multiples. “Would it be possible to use cyclically adjusted net cash flow” – Yes, if you could get hold of the data. The data reached an all-time high of 34.210 in Sep 2016 and a record low of 7.410 in Mar 2009. FTSE 100 CAPE ratio review The FTSE 100 has had a tough time over the last few years, largely thanks to the eurozone crisis of the early 2010s and, since 2016, Brexit. 2) Estee Lauder another all time high stock according to the market on the other hand management have reported loss, axing of jobs due to closure of concessions which make a large contribution. And while tech is important, people and the economy need steel, copper, heavy machinery, buildings, clothes, food and lots of other non-tech stuff as well. Look at the performance of the FTSE 100 and compare with either the FTSE 250 or the S&P 500. Forward PE multiples hit new decade highs in August amid buoyant risk appetite and recovery hopes for both economies and corporate earnings. That might be a bit extreme, but the army of armchair traders created during lockdown won’t listen anyway, because when you’re in a bull market, everyone thinks they’re a genius. Of course, it’s possible that the US economy has switched permanently into a low inflation high growth economy, and therefore can justify higher CAPE ratios effectively ‘forever’ (say the next few decades), but then again it might not, in which case CAPE is likely to revert to its mean when the current high levels of growth taper off. Okay there are some reasons. Index returns shown may not represent the results of the actual trading of investable assets. Any representation of historical data accessible through FTSE Russell products is provided for information purposes only and is not a reliable indicator of future performance. Finally, we turn to the area where the FTSE is strong and that is dividends. Some people get confused with percentages, so here’s another example. FTSE provides daily P/E Ratio. Tax allowances and the benefits of tax-efficient accounts could change in the future. A range of quality funds to make your choice easier. Your email address will not be published. Source: FTSE Russell/Refinitiv. Given that slightly low valuation, I would say this: The FTSE 250 has had a much better run over the last few years than the FTSE 100, having quadrupled in price from late 2008 (the depths of the credit crunch) to the start of 2020 (just before the pandemic set in). All of these companies not only have an international focus they happen to dominate their sector against other international companies. It’s important to remember that these are averages and returns over any given decade can be much higher or lower than average. There is another reason why FTSE 100 has under performed relative to S&P 500, most of the FTSE 100 is made of mediocre companies which wouldn’t pass the quality test. If the index returned to “fair value” tomorrow it would decline by more than 40%. First off there is the PE ratio. Hope That makes sense and really do appreciate your work. What would you say to the idea that the FTSE 100 is actually an international large cap index? This will also remove any price alerts you have set for this investment. Alternatively, if the FTSE 250’s CAPE ratio had stayed below 14 for the last 30 or so years, then the index would have stayed in the dark green zone at the bottom of the rainbow and would have a value today of less than 12,000.
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