|Today's chart illustrates the price to earnings ratio (PE ratio) from 1900 to present. Generally speaking, when the PE ratio is high, stocks are considered to be expensive. When the PE ratio is low, stocks are considered to be inexpensive. From 1900 into the mid-1990s, the PE ratio tended to peak in the low to mid-20s (red line) and trough somewhere around seven (green line). The price investors were willing to pay for a dollar of earnings increased during the dot-com boom (late 1990s), surged even higher during the dot-com bust (early 2000s), and spiked to extraordinary levels during the financial crisis (late 2000s). Since the early 2000s, the PE ratio has been trending lower with the very significant but relatively brief exception that was the financial crisis. More recently, the PE ratio has moved significantly higher and is fast approaching the low 20s -- a level around which several stock market rallies stalled (e.g. 1929, several from 1958 to 1972, and 1987).Notes:
Where's the Dow headed? The answer may surprise you. Find out right now with the exclusive & Barron's recommended charts of Chart of the Day Plus.
Rate today's Chart of the Day
By voting every day you help us get you the charts you want to see.
Quote of the Day"Value (like beauty) is in the eye of the beholder." - Dean Lebaron
Events of the DayJune 21, 2013 - First Day of Summer (North America)
June 24, 2013 - Wimbledon tennis tournament begins (ends July 7th)
June 27, 2013 - US Women's Open golf tournament begins (ends June 30th)
July 01, 2013 - Canada Day
Stocks of the Day-- Find out which stocks investors are focused on with the most active stocks today.
-- Which stocks are making big money? Find out with the biggest stock gainers today.
-- What are the largest companies? Find out with the largest companies by market cap.
-- Which stocks are the biggest dividend payers? Find out with the highest dividend paying stocks.
-- You can also quickly review the performance, dividend yield and market capitalization for each of the Dow Jones Industrial Average Companies as well as for each of the S&P 500 Companies.
Mailing List InfoChart of the Day is FREE to anyone who subscribes.
To ensure email delivery of Chart of the Day, add firstname.lastname@example.org to your whitelist.
Journalists and bloggers may post the above free Chart of the Day on their website as long as the chart is unedited and full credit is given with a live, do follow, text link to the Chart of the Day homepage using the following HTML...
If your site provides a list of helpful links, we would appreciate it if you added a link for Chart of the Day at http://www.chartoftheday.com. However, Chart of the Day Plus charts are to be viewed by paying Chart of the Day Plus subscribers only and may not be republished.
Chart of the Day is provided to subscribers without warranty of any kind and accepts no responsibility for its accuracy or for any consequences of its use.