In 2000 when the Nasdaq rolled over 5000 the PE of the S&P 500 was at a all time high for the end of a bull run at about 45.
And then would go to about 48 sometime I think it was 2002, this is why the performance of stocks has not done well the past 10 years, the PE was way to high.
Thanks to the big drop in the stock market the PE has now dropped to it's lowest level in years, and when this has happened over history the market has performed very well over the next 10 years.
Here's a chart from a Yale professor who developed his own PE OF THE S&P 500, based on the past 10 years earnings, which according to him levels out the effects of bussiness cycles.
And he includes the "true returns" adjusted for inflation and what ever else he does.
10 year period----PE at beginning of period ----ave yearly returns
1929-1938 ----- 26.7 ----- 3.55%
1939-1948 ----- 16.2 ------ 7.7%
1949-1958 ------ 9.9 ------- 21.56%
1959-1968 ------ 18 -------- 10.63%
1969-1978 ------ 20.8 ------ 4.48%
1979-1988 ------ 9.2 ------- 16.65%
1989-1998 ------ 15.1 ------ 19.86%
1999-2008 ------- 40.4 ----- 00.65%
2009 -2018 ------ 15.3 ----- ?????
As you can see the market produced positive returns in every ten year period since 1929 anyway........
The largest returns over any 10 year period followed the smallest PE , in other words when stocks are cheap.
By far the smallest return was 1999 till 2008, which was also by far the single highest PE of the 10 year periods because of the tech bubble, pure speculation.
The PE at the beginning of 2009 was one of the smallest in the 10 year period, in 1989 with a similar PE of 15.1 the markets soared to a 19.86% return per year for 10 year.
With so many nervous people out there, there's plenty of money on the sidelines, we're going up folks !!!!!!
.
Hot Forum Topics
