Redpoint CEO Max Cappetta joins the AFR for the Fundie Q&A:
Q: Do you think the Australian sharemarket is due for a correction?
A: Trading at a multiple of 18 times forward earnings estimates, the S&P/ASX 200 is priced at similar multiples to where it was at the end of 2019 (pre-COVID). Earnings estimates for 2022 are slightly higher than at the end of 2019 and share prices are also slightly higher after a tumultuous two years.
The S&P/ASX 200 rarely traded above 15 times forward earnings between 2006 and 2016. A simple derating of the price-to-earnings multiple points to the potential for a 10 to 15 per cent fall from current market levels.