Valuation Changes During the Current Bull Market

---

There is always a lot of attention paid to the price changes that sectors have experienced during the current bull market, but there’s not much focus on the changes in their valuations. Below we take a look at both using a scatter chart that shows the percentage change in both price and P/E ratio since March 9th, 2009. As the price of the sector rises, earnings need to rise just as much or else the P/E ratio will increase. It’s common for P/E ratios to expand during bull markets, but a sector becomes more attractive if it can keep its valuation down as its price increases.

In the chart below, the farther to the right on the horizontal axis and the farther down on the vertical axis, the better. In the case of the Industrials and Consumer Discretionary sectors, both have risen by a similar amount, but the P/E

…

By Bespoke