Crestmont Market Valuation Update
June 1, 2017
by Jill Mislinski
of Advisor Perspectives
Quick take: Based on the May S&P 500 average of daily closes, the Crestmont P/E is 110% above
its arithmetic mean and at the 99th percentile of this fourteen-plus-decade monthly metric.
The 2011 article P/E: Future On The Horizon by Advisor Perspectives contributor Ed Easterling
provided an overview of Ed's method for determining where the market is headed. His analysis was
quite compelling. Accordingly, we include the Crestmont Research data to our monthly market
valuation updates. See also his latest update: Understanding Secular Stock Market Cycles.
The first chart is the Crestmont equivalent of the Cyclical P/E10 ratio chart we've been sharing on a
monthly basis for the past few years.
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The Crestmont P/E of 29.6 is 110% above its average (arithmetic mean) and at the 99th percentile of
this fourteen-plus-decade series.
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Crestmont Deviation from the Mean
Here are a pair of charts illustrating the historic Crestmont P/E ratio from its mean (average) and
geometric mean with callouts for peaks and troughs along with the latest values.
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Background on Ed Easterling's Crestmont P/E
For a better understanding of these charts, please see Ed's two-part commentary here:
P/E: So Many Choices, Part I
P/E: So Many Choices, Part II
Ed Easterling is the author of Probable Outcomes: Secular Stock Market Insights and award-winning
Unexpected Returns: Understanding Secular Stock Market Cycles. He is currently President of an
investment management and research firm. In addition, he previously served as an adjunct professor
and taught the course on alternative investments and hedge funds for MBA students at SMU in
Dallas, Texas. Mr. Easterling publishes provocative research and graphical analyses on the financial
markets at www.CrestmontResearch.com.
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