So what this table shows is that your wages earned in each year you were working have been indexed to compare with the Average Wage Index for your age 62 year, then the top 35
indexed earnings years are totaled and divided by 420 to come up with the Average Indexed Monthly Earnings — your very own AIME.
Not exact matches
The major
indexes have since struggled to hold gains for the
year amid worries about rising interest rates, a U.S. - China trade war, prohibitive regulation on technology giants and a peak in
earnings growth.
Over that past 20
years, the price - to -
earnings ratio of the Nasdaq Biotechnology
Index has averaged 2.3 times the S&P 500 P / E ratio; today, the current ratio is mere 1.3 x, a 54 percent discount to its 20 -
year average (according to Thomson Reuters, as of Sept. 26, 2017.)
There are only a handful of times over the past 20
years that the Standard & Poor's 500 and the S&P / TSX composite
index have had price - to -
earnings ratios this low.
The government data showed that average hourly
earnings grew by 6 cents or 0.4 %, the biggest jump this
year, while the SurePayroll pay
index increased for the second straight month.
The cheapest company in that
index, which does not include Canada - based Valeant, is still more expensive than Valeant: Fellow troubled drugmaker Endo International (endp), which trades at five times this
year's
earnings.
The analysis used to calibrate next
year's
index view involves nine different methods, including a normalized
earnings yield gap approach, the P / E Bulls - Eye, currency measures, and consumer confidence, which supports a 1,900
year - end result for the S&P 500 - 4 % above the previously released June 2014 expectation of 1,825.
Chief Asia Equity Strategist Jonathan Garner expects 26.5 %
year - over-
year average
earnings growth for components of the benchmark Tokyo Stock Price
Index in 2017, followed by 9.8 % growth in 2018.
Each
year's
earnings, up to the Social Security taxable maximum, is
indexed for inflation, and the 35 highest
years are considered.
Analysts predicted
earnings for
index constituents could rise to as high as $ 145.63 should tax reform pass this
year.
Strong EM equity performance has largely followed a broad - based
earnings recovery over the past 18 months, after
earnings of MSCI EM
Index companies had slid 7 % a
year since 2011.
After that we average your highest 35
years of
indexed earnings to calculate your social security benefit
Then we use the average of your highest 35
years of
indexed earnings to calculate your Social Security benefit at full retirement age.
Earnings growth at U.S. companies in the S&P 500
index grew last quarter at the fastest pace in nearly six
years, which may help investors justify elevated valuations.
As the S&P 500
index has advanced this
year mostly through multiple expansion, the
index is no longer cheap, particularly considering that we are now almost half a decade into an economic expansion and
earnings growth is unexciting.
The graph below compares the level of the PMI
Index and the
year - over-
year changes in S&P 500
Index earnings shifted forward by six months (the blue line).
If the
index reports a decline in fourth - quarter
earnings, it will be the first time the
index has reported three consecutive quarters of
year - over-
year declines since the first quarter of 2009 to the third quarter of 2009.
According to FactSet Research, the fourth quarter will mark the first time the
index has seen
year - over-
year growth in
earnings for two consecutive quarters since Q4 2014 and Q1 2015.
With 45 % of the constituents of the S&P 500
Index having reported Q3
earnings, the blended estimate for aggregate
year - over-
year earnings growth is 5.3 %.
Companies in the S&P 500
Index are expected to deliver 10 %
earnings growth on average
year - over-
year for 2017.
Earnings remain robust but some fear peak With 53 % of the constituents of the S&P 500 Index having reported, blended earnings are seen up 23.2 % versus the same quarter a y
Earnings remain robust but some fear peak With 53 % of the constituents of the S&P 500
Index having reported, blended
earnings are seen up 23.2 % versus the same quarter a y
earnings are seen up 23.2 % versus the same quarter a
year ago.
Last week, the S&P 500
Index ascended to a Shiller P / E in excess of 24 (this «cyclically - adjusted P / E» or CAPE represents the ratio of the S&P 500 to 10 -
year average
earnings, adjusted for inflation).
The statistical cratering of S&P 500
Index earnings from $ 84.92 in June 2007 to $ 6.86 in March 2009 will weigh uninterrupted and un-weighted on the Shiller P / E for another 5
years, even though the many of the companies responsible for the crater are no longer part of the
Index.
The stocks in the MSCI Emerging Markets
Index on average are trading at 10.2 times next
year's
earnings, compared with a P / E of 15.2 for the S&P 500, FactSet noted.
Without ascribing value to the company's non-earning assets, which include messaging platforms WhatsApp and Messenger (among others), Facebook is trading at less than 15x next
year's
earnings (excluding net cash), a discount to the S&P 500
Index.
Investor sentiment in emerging markets was at a 20 -
year low at
year - end, and an
index of emerging market stocks was the cheapest ever on trend -
earnings multiples, suggesting that, in at least some instances, concerns may be adequately discounted.
The top 35 inflation -
indexed years are averaged together and divided by 12 to produce your average
indexed monthly
earnings, or AIME.
P / E10 is the current price (
index value) of the S&P 500 divided by the average of the trailing ten
years of
earnings.
Each
year's
earnings, up to the Social Security taxable maximum, is
indexed for inflation, and the 35 highest
years are considered.
First, the author compares the price - to -
earnings (P / E) ratio of the S&P 500 ®
index based on reported (i.e. net income) trailing twelve month (TTM)
earnings to a 140 -
year median value.
[P / E10 is the latest
index level (or price) of the S&P 500
index divided by the average of the previous ten -
years of
earnings.
To put numbers to it, the Standard & Poor's 500 - stock
index's cyclically adjusted price - to -
earnings ratio («CAPE»), which compares a 10 -
year average of corporate
earnings to today's share prices, clocks in at 31.
Similarly, the denominator of the ratio is a 10 -
year average of real trailing
earnings of the
index.
Applying those multiples to today's real 10 -
year averaged
earnings ($ 55) would imply an S&P 500
Index of 825, 715, 550, and 385, respectively.
(Investors can also take a more relaxed approach because the three
earnings - based portfolios still outperformed the
index by more than four percentage points per
year when they were rebalanced annually instead of monthly.)
[The percentage
earnings yield is 100 / [P / E10] where P / E10 is the current price of the S&P 500
index and E10 is the average of the most recent ten
years of
earnings.
Plus, if record profit margins of the last few
years prove unsustainable, then recent
earnings figures may be overstating the true
earnings power for the
index.
Even after a
year that saw major stock market
indexes simply tread water, equities are by many accounts considered expensive, challenged by rising interest rates and a less - than - stellar outlook for corporate
earnings.
The median P / E ratio has fallen from about 19 times
earnings last
year this time, which indicates a clear improvement in the valuation of the typical stock in the
index.
It is the (real)
index level (price) of the S&P 500 divided by the average of the previous ten
years of (real)
earnings.
It is the price (
index level) of the S&P 500 divided by the average of its most recent ten
years of (trailing)
earnings.
However, given the good run of the equity
indices over the last five
years and the advanced stage of the bull market, Charles Schwab's revenues and
earnings will take a hit as soon as equity
indices are tanking.
For instance, since the early 1980s, the yield on the benchmark 10 -
year Treasury note has fallen from roughly 16 % to 2 % and the Standard & Poor's 500 - stock
index has climbed from less than eight times
earnings to 25 times
earnings.
P / E10 is the current price of the S&P
Index over average of the last 10
years of
earnings.
I tabulated 100D5 / P, 100E10 / P and D5 / E10 where D5 is the average of the following five
years of (real) dividends, E10 is the average of the previous ten
years of (real)
earnings and P is the (real) price or
index value of the S&P 500
index.
It is the current (real) price of the S&P 500
index level (price) divided by the average of the most recent (trailing) ten
years of (real)
earnings.]
That brings us to the next potential risk — the risk that the largest companies in the S&P 500
Index also tend to be overvalued when compared with their 10 - year average price / earnings (P / E) ratio.2 According to our research taking these valuation measures into account, 70 % of the 10 largest stocks in the S&P 500 Index were overvalued, as of December 31, 2015 and 56 % of the top 25 stocks are overvalued, the very same ones that make up a third of the index alloca
Index also tend to be overvalued when compared with their 10 -
year average price /
earnings (P / E) ratio.2 According to our research taking these valuation measures into account, 70 % of the 10 largest stocks in the S&P 500
Index were overvalued, as of December 31, 2015 and 56 % of the top 25 stocks are overvalued, the very same ones that make up a third of the index alloca
Index were overvalued, as of December 31, 2015 and 56 % of the top 25 stocks are overvalued, the very same ones that make up a third of the
index alloca
index allocation.
For instance, the S&P 500 Utilities
Index's forward 12 - month price - to -
earnings ratio is 16.3, while its 10 -
year average is 14.6.
It presents a 15
year comparison of the normal MSCI
Index with its Value - weighted counterpart (weighted by book value,
earnings, cash
earnings and sales, not dividends), and also with portfolios screened for single metrics.
It is the current (real) price of the S&P 500
index level (price) divided by the average of the most recent (trailing) ten
years of (real)
earnings.