I was trying to search for the historical price to earnings ratio or in short, the P/E ratio for the S&P 500, a major US index. My search was not exactly that fruitless and I managed to get a Excel spreadsheet of the data from the official website of Standard and Poors here although the data is only up to 2008. However, the data goes back to a long time starting from 1936. Using the data, I managed to plot the P/E ratio against time and the chart is shown below.
From the chart, the P/E ratio has not drop below 10 since 1984. Following which, the P/E ratio has consistently remained above 10. This chart is a good gauge of when it is a good time to accumulate the S&P 500 given that one can buy an ETF that tracks the S&P 500 on the SGX. This ETF is the iShares S&P 500 trading under the symbol IS S&P500 10US$.
17 comments
Another one you may be interested in that many investors use is that calculated by Robert Shiller who wrote "Irrational Exuberance". It is at
http://www.multpl.com/
It is based on a bit more complicated definition of the S&P 500 P/E ratio.
Hi,
I came across this website too before. Thanks for sharing. Well, I didn't exactly like that the earnings used in the computation is the average inflation adjusted earnings for the 10 previous years. Definitely, I believe Shiller has a good reason for doing so.
Kay
Hm, so no one has more recent data? I have read how this year should be a good year as companies margins generally speaking, should be better given the cut backs in the last few years and with the general economy picking up.
As such, I am bullish about the S&P 500 even tho it price levels are the highest in a while.. your thoughts?
Hi,
Well, recent data are definitely available but whether I can get it free is another matter. Overall, earnings are picking up and the general economy is picking up. On the other hand, I'm still waiting for the companies in my watchlist to fall below valuation so I guess I may have to wait for quite some time.
Kay
Hi Kay,
This may help : http://www.fool.com/investing/general/2011/02/22/staring-trouble-in-the-face.aspx
Cheers.
Jo.
you can find HSI and STI P/E ratios on my site: http://processdriventrading.files.wordpress.com/2010/12/sti-and-hsi-complete-valuation-ratio-data.xls
in case you are looking for a local equivalent.
student
Hi, I am new to investing. Can I find out what is the minimum amount you can buy ishare S&P 500 using DBS vickers account?
Would using Citibank account be better since they charged lower brokerage fee.
Hi,
The lot size for the iShares S&P 500 listed on SGX is 10 shares. 1 share cost around USD 131 now. Thus 1 lot will cost USD 1310. The minimum purchase is 1 lot. You have to compare the minimum brokerage charge of each brokerage if you are buying the minimum amount.
Kay
Hi Kay,
I have been following your blog for a while, and I have found your blog to be very informative and insightful. Thank you for your research and well-written article!
Your article on S&P500 has piqued my interest to buy iShare ETF S&P500 traded on SGX, but judging from the volume being traded, its liquidity seems to be very low. What's your view on this? Will we face any trouble when selling that time? Is it true that whenever we want to sell, the fund manager will guarantee the liquidity by selling the underlying assets? Pardon me for asking noob question, as I'm very new to ETF investing.
Thank you.
ryan
Hi Ryan,
From the SGX website, there is a market maker who is willing to buy 200 shares. Assuming the share price is USD131, the amount you can buy for 1200 shares is 200 x USD132 = US$26,400. I need to check the prospectus to see if they appoint a market maker but judging from the SGX website, there is indeed a market maker so I believe you should have not trouble selling your shares under normal circumstances.
Kay
Hi Kay,
Sorry new to investing and ETF and would like to find out the difference between db x-trackers & the iShares fund. Other than it is manage by different fund managers I notice that the db x-tracker is only USD21.04 currently but I notice the expense ratio is higher compared to the iShares fund. Thanks Kay for your valuable advice
Hi Kay,
You are right! The current market maker for iShares S&P 500 are UBS London AG and Citigroup Global Market Singapore Securities.
Thanks a lot for the insight!
ryan
Hi Johari,
The main difference to me is that the ETFs offered by db x-tracker are synthetic ETFs while I believe most of the iShares ETFs are cash ETFs. Based on this fact, I would not buy any synthetic ETFs given that I rather averse to risk.
Kay
Hi Kay
I'm also researching in depth about the costs of investing in ETFs listed on the SGX or NYSE Arca. Basically I thought I should point out a few ambiguities for everyone on trading on the SGX!
1) Given the low volume traded of the iShares ETF on the SGX, and the presence of the market maker, I think the spread would be rather high. This could possibly make any cost savings from buying ETFs quite negligible?
2) Brokerage costs might be higher, since there's the currency conversion involved at the retail investor level. Thus we are subject to conversion rates by the brokers.
So in short, after taking into consideration these 2 points, how attractive is the iShares ETFs still? One point to note is the relative strength of the USD, making it a good time to buy now.
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Investors does not seem to appreciate risk adequately. By using index fund, they spread the risk and keep pushing the individual stocks P/E higher and higher.
No wonder that bonds are betting stocks last 10 years...
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