Aggregate P/E Ratio Analysis

Right about average

If we take the twenty largest stocks in the S&P 500, which includes AAPL, MSFT, GOOG, AMZN, TSLA, BRK-B, UNH, META, JNJ, V, NVDA, XOM, PG, WMT, JPM, MA, LLY, PFE, HD, and KO, and look at an aggregate P/E ratio over time you get this chart:

Obviously, ten years ago was a good time to buy a basket of these stocks. P/E was pretty low coming off the Great Recession.

Since we don’t have a time machine, we can look at today and see that, by this metric, it’s not the worst time to buy. With the recent correction in prices, a lot of the excess froth has come off valuations. Ultimately though, this is just a chart, so your own investment decision should be based on your own personal situation!