S&P 500: These 2 Number Worry Me More Than High P/E

2026-02-14 07:00:00 ET

Elevated FINRA margin ratio met with passive trading

With all equity indices (ranging from DJI , SP500 , NASDAQ , and RTY ) hovering around record levels, I’ve seen plenty of critics about the high P/E ratios of these indices and share my counterarguments. To be perfectly clear, I am not saying the current market is not expensive. The points I wanted to make in my counterarguments are mainly twofold. First, valuation multiples need to be contextualized (for example, an article criticizing the SP500's high P/E should also point out the SP500’s high profit margin and/or its global reach, in my view). Second, many analyses that seem/intend to run a multifaceted diagnosis on the market are still about P/E ratios in my view and thus do not add additional insights. Some of these examples I’ve read recently included the high Buffett index, the high rule of 20 scores, the high 10-year rolling returns, etc....

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