Once and Future S&P 500 P/E Multiples

By Paul Kedrosky · May 31, 2007 · ·

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]

Related posts:

  1. Barron’s Rips Google a New One
  2. Cisco Hasn’t Exited the Tunnel o’ Telecom
  3. Google’s Free Rider Future
  4. Bearish on Google Interest Income
  5. Barron’s Begs SpikeSource to Go Public

Comments

  1. Nitin says:
    May 31, 2007 at 12:26 pm

    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. shaz says:
    May 31, 2007 at 8:05 pm

    30% ohw too much to bare

  3. Motts McGregor says:
    June 1, 2007 at 3:44 am

    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.
    -Motts