Sunday, December 13, 2009

Historical S&P PE Ratio vs. Historical Inflation Adjusted S&P 500

This chart might be hard to read but it is very interesting. On the top is the S&P 500 (inflation adjusted) On the bottom is the PE ratio during this time. The green squares are the time period when the PE is under 10 and the red squares are time periods where the PE is above 20. Looking at the past cycles you would expect PE to fall to the 5-10 range


  1. Very interesting, thanks for sharing!

    According to the chart though current S@P is only 20?
    I thought its more like 130...


  2. What is the source? Also, is the P/E based on actual or operating earnings? One year trailing or ten?

  3. I made the chart by combining two charts
    using studies by Robert Shiller (economist at Yale and author of "Irrational Exuberance") P/E uses a 10 year moving average of inflation adjusted actual earnings and the S&P 500 chart is inflation adjusted S&P with monthly CPI data...

    here is the link to the excel download of raw data

  4. That link data is outdated... here is the updated data, both raw data (3rd sheet) and inflation adjusted chart.