The S&P 500 has just crossed the important threshold of 2,100. It was important, in this case, because it looked for a rather long time as though it might never do that. Since hitting 2,090 in the last week of 2014, the market has been up and down, though until just 10 days ago, more down than up. Now we have news of plummeting unemployment claims, a deal in works to keep Greece in the Eurozone, a pay hike for 500,000 Walmart employees.
Still, there's a lingering sense of pessimism out there. It's not hard to understand, given that the bull market is six-and-a-half years old. Bull markets almost never last that long, and the only other one that did was the 1994 to 2000 bull market, which ended in absolute calamity. But it's a far cry from understandable to correct. In 1998 and 1999, stock prices completely decoupled from earnings, whereas today, the average S&P P/E Ratio is still below 20.
Some of this pessimism may be coming from the fact that there are still many stocks with a price that seems, at least to this analyst, unjustifiable. In each of these cases, I find more to dislike than a P/E Ratio – there's something gruesome going on here. That's only one man's opinion, to be sure, but even so, those looking for a safe place to put their money would be well to leave these high-flyers alone.