Thursday, April 3, 2008

Rising PE Ratios in Declining Markets

The Price to Earnings (PE) ratio of the S&P 500 can rise for two reasons:

  1. Price increases outweigh earnings increases.
  2. Declines in earnings outweigh price declines.
I leave you to figure out which one of these two reasons is causing the PE Ratio of the S&P 500 to rise above 20 this week:


Hat Tip: Bespoke

Posted by The La Jolla Guy at 12:33 AM

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1 comment:

Anonymous said...

Such a nice blog. I hope you will create another post like this.

May 19, 2008 at 11:22 AM

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