Once and Future S&P 500 P/E Multiples

Some useful factoids on the S&P index’s price/earnings multiple at its peak, at its recent nadir, and today:

  • March 2000: 32.8
  • October 2002: 25.7
  • May 2007: 18

Of course, that is all relative stuff, so it’s worth looking at the long-term historical figure. There is considerable debate here, but the consensus, such as it is, is that the historical S&P multiple based on operating earnings is around 12.

[via Bloomberg]


  1. So we have about 30% more to fall to get to the mean. Considering the US dollar has fallen at least 30% we are at the historical mean at the moment

  2. 30% ohw too much to bare

  3. Motts McGregor says:

    You should see John Hussman, James Montier, and Jeremy Grantham for more on this multiple occurring in connection with peak margins — as Grantham says, if profitability does not mean-revert, capitalism is essentially broken. Also I don’t think the operating earnings series goes back long enough to be meaningful.