S&P 500 Earnings Growth – Mind The Gap

S&P 500 Earnings Growth – Mind The Gap

Since October 1, 2011, the S&P 500 has risen 82% on the heels of strong earnings growth.

Let’s start over. Since October 1, 2011, the S&P 500 has risen 82% on the heels of a 0.75% decline in earnings. The price to earnings ratio over that time period has risen 83%, with price gains contributing 99% to the increase. Prices have risen substantially, while earnings have actually fallen. The chart below highlights the growing gap between earnings and the S&P 500.

Growth of the S&P500 P/E and its Components since 2011

S&P 500 Earnings Growth

This chart illustrates that sentiment...