S&P 500’s Valuation Signals Future Returns May Be Minimal

Owning U.S. stocks may hardly pay off in the next few years because they cost so much relative to earnings, according to Leuthold Group LLC. The firm looked at the S&P 500 Index’s total returns over time for 10 ranges of price-earnings ratios, using figures from 1957 through this year, and presented the results in a July 31 Twitter post. The P/E as of July 27 was in the highest range, which led to the lowest return: 2.9 percent annually on average over 10 years.