Of course, they could raise their forecasts, but that would be awkward given the trend in profits and the slowing economy. Third-quarter earnings are tracking at a 3% decline from a year earlier, and forecasts for the fourth quarter have been cut to a gain of 1.2% from the 5.4% increase that was forecast at the end of July, according to Cantor Fitzgerald. The S&P 500’s price-to-earnings ratio, at just shy of 20 times, is the highest since last October, just as the benchmark was beginning a tumble that led to a 14% drop in the final three months of the year.

All that suggests investors need to look beyond the headlines about yet another record.

Robert Burgess is an editor for Bloomberg Opinion. He is the former global executive editor in charge of financial markets for Bloomberg News. As managing editor, he led the company’s news coverage of credit markets during the global financial crisis.

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