At 21 times next-12-month earnings versus 28 times trailing profits, the S&P 500 looks cheaper on a forward basis, but academics say that gap mainly reflects unusually aggressive earnings expectations.
FactSet data show spreads this wide have been rare outside extremes such as 2000, and experts say any miss on second-quarter results or guidance next week could trigger a pullback or multiple compression.
Itzhak Ben-David said the implied earnings growth has occurred in fewer than one in five quarters since 1989, mostly after earnings collapses—not from today's record-high profit base.
John Campbell said the lower forward P/E does not prove stocks are fairly valued over the long run, while Shiller's CAPE framework still points to an unusually expensive market.
Research cited in the report also questions reliance on analyst forecasts, arguing forward P/E often repackages embedded optimism and may be less useful than trailing P/E for judging future growth.