A lot of things have happened in the past year, but an economic boom warranting a 38% rise in the Russell 2000 is surely not one of them. Yet here we are with the RUT up 2%, today, 15% year-to-date and the aforementioned 38% since February 18, 2020, at which time no one even remotely envisioned the mayhem that the Covid Virus Patrol would inflict upon the US economy.
Moreover, the PE multiple back then was already a super-frisky 55.5X the limpid trailing earnings of the 2,000 companies in the index, which earnings have now disappeared entirely for the index basket as a whole. That is, the PE multiple for the the vast ranks of small and mid-cap main street companies is infinite because upwards of 40% of them actually lost money on an LTM basis.
So, perforce, the index must be measured against profitless sales, a ratio which is off-the-charts of history, as shown below; or by the Wall Street sell-side’s hockey sticks on next year’s projected earnings, which multiple today weighs in at a hideous 64X!