When it comes to earnings, Wall Street has already moved on to 2021

The coronavirus crisis dealt a heavy blow to markets in March, as earnings estimates for the year have increasingly become more grim—hovering around negative 20% or more for 2020. Yet the S&P 500 is currently trading at over 20 times the next 12 months’ earnings—a historically expensive level that’s caused valuations of many companies to skyrocket.

One reason? According to strategists, Wall Street is largely writing off 2020 earnings and looking to brighter days ahead. “I do think in the market, investors are kind of looking through the valley,” says Liz Ann Sonders, Charles Schwab’s chief investment strategist.

Indeed, “investors are basically saying, ‘When it comes to earnings, tell me something I don’t know. I already know that 2020 is going to be horrible,’” CFRA’s chief investment strategist Sam Stovall tells Fortune. “What they don’t know is truly how good they’re going to be next year.”

In fact, estimates for earnings growth next year are an entirely different picture. Some estimates are for a 30% increase in earnings in 2021. At the market’s current levels, “prices lead fundamentals, but I sort of wonder if they’re leading them too far,” says Stovall.

The problem is, “we still don’t know the answer to the question, Well, how deep is the valley?” says Schwab’s Sonders. Especially now, earnings estimates are a “moving target,” she says, but while estimates for 2021 are far more optimistic, with double-digit growth, “is it a 25% or 30% jump from $125 [S&P 500 earnings per share], or from $100 or $90?” she asks.

Hoping for a V-shaped recovery

Regardless where the jumping-off point is, with 2020 a muddled—but presumably negative—picture, investors are still hoping that the recovery looks more like a V-shape and not the dreaded L.

Experts say the markets are pricing in a “definitive trough” in earnings in the second quarter, and a “pretty significant liftoff from there,” notes Sonders. Just how bad (or good) those earnings turn out to be should either confirm or deny expectations of a V-shaped recovery into next year.

But with record numbers of businesses having withdrawn guidance recently (not to mention a large chunk of S&P 500 companies that weren’t even supplying quarterly guidance before the crisis), now, says Sonders, “estimates are just a dart game. The analysts are probably just closing their eyes and swirling their pencil around, landing on a number, and saying, ‘Well, that’s as good as any.’”

2020 is ‘entirely different’ from 2008

Back in the 2008 to 2009 financial crisis, the market bottomed before earnings improved. Markets looked ahead to brighter days then for earnings, and by the time the market bottomed, the forward P/E (price-to-earnings) was back up (the S&P 500 forward P/E was over 14 a couple of months after the market bottomed in 2009—up from 9 in November 2008). That pattern is consistent with most recent history, strategists say, and is also seemingly the case now—with the worst data in earnings expected to come in the second quarter of 2020, while the market (likely) bottomed in the first quarter.

But Sonders says this time is “so entirely different” owing to its nature as a health crisis versus a man-made financial crisis. In 2008 to 2009, there was an expectation that earnings would improve once the market bounced off its bottom. But, unlike today, “that expectation was less about hope and more about the simple fact that, largely based on what the Fed had done, the crisis was in the financial system,” Sonders suggests.

The 2008 crisis could largely be solved with tools from the Fed and policy to fix the financial system (what analysts note was the stem of the crisis). Once markets understood the crisis could largely be contained, “it was easier at that point in time to come up with a legitimate outlook for earnings off of that bottom,” Sonders points out.

But now, the fact that there is no simple fix to the current environment is why those like Sonders and Stovall believe it’s much harder for analysts to judge what a recovery in earnings will look like, because the hit is “across every sector in the economy,” says Sonders.

Yet the market now is far more expensive historically than even during the 2008 crisis. The S&P 500 traded at roughly 15 times the next 12 months’ earnings in early 2009, while the index trades at over 20 times forward earnings (several points above the historical average) today.

Set up for risks?

Some feel that taking the long view is a positive, especially in light of the growth prospects of some of the biggest names in the rally (think: tech stocks). “We’re pleasantly surprised at how quickly the market has looked forward to the recovery in 2021 and 2022,” LPL Financial’s Jeff Buchbinder recently told Fortune. “Looking at earnings two, three years out, then I think you can start to assess whether a P/E ratio is reasonable,” he said. And those ratios do look more reasonable a couple of years into the future (for a few big names at least).

Analysts at LPL Financial recently wrote in a note that valuations are “not as worrisome as they may appear,” given the potential for a steady recovery in earnings in the next of couple years and interest rates kept at a low level.

But strategists like Sonders and Stovall wonder if we’re still too cheery about the picture, even in a year or two. For one, Sonders thinks that with current valuations so high, “we’re set up for some risks here.”

That strikes a chord for Stovall as well. While he suggests that, for the most part, investors are not overly optimistic, “you do wonder, Okay, I can appreciate how Wall Street is anticipatory—it’s discounting the negative news now for positive news later,” he says. “But by how much is appropriate?”

Guess we’ll find out in 2021.

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