The S&P 500’s forward price-earnings ratio of 21 times looks reasonable next to a trailing P/E of 28, but experts warn the wide spread signals extreme earnings optimism that rarely materializes outside post-recession rebounds. NYU Stern professor Aswath Damodaran notes the gap directly measures expected earnings growth, while Ohio State’s Itzhak Ben-David says growth of this magnitude starting from record-high earnings has occurred in fewer than one in five quarters historically. Harvard’s John Campbell adds that the lower forward P/E does not justify high stock prices, pointing to the cyclically adjusted CAPE ratio as evidence that stocks remain unusually expensive. Ben-David’s research also finds analysts often set price targets by multiplying forecast earnings by the trailing P/E, meaning the reassuring forward multiple simply restates the optimism embedded in those forecasts.