Does driving 70 miles per hour, while singing a favorite song, sound overly aggressive to you?  The answer likely depends on the context.  What is the speed limit – 25 or 75 mph?  What are the road conditions?  How is the weather?  Is the driver fresh or exhausted?  Is this in a school zone?  Is it in the light of day, or dark at night?  What is the vehicle in question?  Each of these elements might influence the answer to the original question.

According to FactSet, the S&P is currently trading at 21.2 times forward 12-month earnings.  Does this seem overly aggressive?  Like the previous question, it likely depends on the context.  The five-year average multiple is 19.9, while the ten-year average multiple is 18.9.  From a historical perspective, the current P/E appears to be a bit rich.  Add in any number of potential turns and bends in the road - Iran, inflation, the K-shaped recovery, politics, geo-politics, and overall general uncertainty and chaos, perhaps the market could be over-valued?

However, corporate earnings are booming!  According to FactSet, the street consensus 2026 YOY earnings projections for the S&P 500 stand at 22.6%.  From that perspective the market looks attractively priced.  In fact, a forward P/E of 21.2 divided by the growth rate of 22.6, provides a PEG ratio (P/E to Growth) of 0.938.  The lower the PEG, the more reasonably priced the market.  Based on charts from Yardeni and Associates, this is only the sixth general time period since 1995, when the PEG ratio was less than one!  With history as our guide, this is quite encouraging for long-only equity investors.

This weekend, as you are cruising down the road, driving at a comfortable speed, perhaps put on Peg by Steely Dan, and sing along, knowing the market is not overly priced!  In fact, the market is quite attractively priced for those with a longer-term time horizon.  Nevertheless, watch for short-term twists and turns ahead, in order to get to the long term destination.  Make it a great weekend!

https://www.youtube.com/watch?v=LI7NDDQLvbo&list=RDLI7NDDQLvbo&start_radio=1

https://www.yardeni.com/charts/us-stock-market/stock-market-valuation/stock-market-p-e-ratios

Not an offer or Advice: This commentary is provided for informational and educational purposes only and does not constitute a recommendation to buy or sell any specific security or to adopt any particular investment strategy. The views expressed represent the current opinions of Joyce Wealth Management as of 5/29/26 and are subject to change without notice.