TW: On 1/9/09 I posted John Maudlin's original summary of S&P earnings estimates. At that time the analysts were forecasting CY2008 earnings at $42. With the actual results about 75% in the likely outcome will be $30. Giving the S&P a backward P/E multiple of about 29 (long-term avg. is 15). The market obviously is a forward looking tool though.
Those same analysts are holding their 2009 S&P estimates at about $42 (they were at the same level on Jan 9) or an implied forward P/E multiple of the same at 29. So if you are bullish, you are assuming either more multiple expansion (from 29 to ???) or earnings growing faster than estimates (despite those estimates for the past two years being wildly optimistic). Your call.
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