Howard Marks, CEO of Oaktree Capital Management, which runs around US$218.0 billion wrote a well publicises article on S&P returns. this time last year. In the note he looked at the correlation between current S&P 500 PE ratios and future 10-year returns in the index. the data. which stretched back 27 years, suggested that:
“When people bought the S&P at p/e ratios in line with today’s multiple of 22, they always earned ten-year returns between plus 2% and minus 2%.”
The current FWD PE for the index is 22.1 times earnings and the index itself is up by just +1.02% year to date.
My honest opinion is that there is just too much going on at a macro level to be making longer term predictions about the index performance, over the balance of the year. If issues such as Greenland, the reprise of Trump Tariffs, and possibility of conflict with Iran resolve themselves in the next couple of months.
Then we could see another rally, but without that, I am thinking that we will see a year of mediocre/subpar returns from the S&P 500.
However, if January is anything to go by, it will be a very good year for stock picking and tactical trading.
