S&P 500 EPS Over Time

By Paul Kedrosky · October 28, 2008 · Discuss ·

Useful chart from Crestmont of S&P 500 earnings-per-share over time, and how that has oscillated around a historical trendline tied to GDP growth.

crestmont-pe

It provides support for my view that mean reversion plus an overshoot could easily get us to $45 in earnings on the S&P 500 next year. The upshot? A conservative multiple makes the current S&P 500 look like something other a trough valuation.

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