The last time the dispersion of valuations came close to being this narrow was in October 2006, a year before the last bull market ended, Goldman Sachs data show. Before that, multiples were most compressed in September 1997, 10 months before the biggest bull market on record ended.
Goldman Sachs’s price-earnings ratio dispersion is a monthly reading of standard deviation, or the variance from the average, for companies in the S&P 500. Goldman Sachs compiles data for companies whose price-estimated earnings ratios are between zero and 75.
Bull markets since World War II have ended after about four years, according to the average of data compiled by Bloomberg and Birinyi Associates Inc. This rally has lasted more than 4 1/2 years. Its 166 percent gain has exceeded the 122 percent average return for the last 12 bull markets.
“We’ve gone from the fear of losing to the fear of losing out,” Leclerc said. “That’s always a dangerous inflection point.”