companies have reported a combined $237 in earnings per share over the last 12 months , while the street expects another $263 in EPS over the next 12 months .
But PE ratios don’t tell the whole story. You have to compare the asset class to alternatives. In this case, fixed income. If we look at the equity risk premium , we see that treasuries are about as attractive as stocks for the first time since the 2008 financial crisis. Investors are probably fed up with treasuries. They’ve underperformed for a couple of years as rates rose. I’d urge you to consider the purpose of bonds. They are not for growth, they are to help offset the losses during a deflationary bear market. If you’ve ditched your treasury bonds, you now have no protection against the inevitable storm.
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