SPY ETF: Higher Multiples Are Justified

The S&P 500 PE multiple at fair value has been trending upward due to continuous debt monetization by central banks since the Global Financial Crisis. This expansion is partially explained by currency debasement and global liquidity flowing into scarce assets. Mega cap tech stocks, driven by internet-based growth, dominate the index and have higher PE ratios. Companies like Amazon, Apple, and Microsoft have solidified their premiums due to brand value and strong balance sheets. The rise in tech mega caps has caused the S&P 500’s fair value PE to increase. This trend is influenced by global liquidity and monetary policy. Investors should expect to pay higher multiples for shares due to ongoing debt issues. As debt monetization continues, the S&P’s fair value PE may remain elevated. The Everything Code thesis by Raoul Pal explains how debt and liquidity impact asset prices. The article provides projections for the S&P 500’s fair value PE based on historical trends and potential scenarios. Overall, central bank actions and debt levels are driving the market, leading to higher PE ratios for major indices.