Sector valuation

Sector valuations for the S&P 500 speak a clear language. InfoTech is currently at a 40% premium valuation in terms of PER compared to the S&P 500. Compared to the 30 years history this is a rare event: on average the premium was less than 20% and such an extreme valuation as today happened less than 20% of the time. On this other side of the spectrum, energy trades at a 40% discount, something that has happened in less than 5% of all occasions over 30 years. If you believe in any reversion to the mean ( as we do ), it is time to consider valuation spreads in your portfolios.