Anyone know how calculate the estimated 2012 earnings for the S&P 500?
When thinking of the Dow, I previously thought that you added the, per share earnings, of each of the 30 companies, together.
This may be false.
Two analyst on CNBC have different views for next year.
One says S&P earnings will be $80.00 and he is willing to give a price earnings ratio of 10 = S&P 800 = 30%+ drop.
The other guy said "add 20" so he thinks 2012 S&P earnings will be $100.
He never put "his" P/E on it.
And what P/E the market is willing to live with, greatly determines where we go.
If S&P earnings are $100, a P/E of 10 = 1000 or down 20%.
A P/E of 12 = 1200 = about where we are = flat market.
Historical P/E is alot higher than any 10 or 12, but the market conditions may not let it be that high.
So, how did the analyst calculate S&P 500 earnings of $80.00?
Surely the earnings per share of all 500 compnaies, adds up to well over $80. If not, then the average would be a measely 16 cents per company = .16 x 500 = $80.00
Who knows how they calculate it?
I do not know.
I'd like to know.