Stock market valuations are high, with the S&P 500 forward P/E multiple at 22.9x, significantly above the 10-year average of 18.6x. However, valuations alone are not reliable predictors of future prices. In 2020, the forward P/E reached 23.6x as stock prices rebounded. Stock prices doubled in five years due to earnings growth.

While there have been bear markets and market timing challenges, earnings are the key long-term driver of stock prices. Earnings are expected to grow at a double-digit rate through at least 2027. P/E multiples can come down if earnings rise while prices increase at a slower rate. Investors should focus on earnings amid uncertain valuations.

Read more at Yahoo Finance: What happened the last time the S&P 500’s forward P/E was this high