July 23, 2020

S&P 500 historical PE ratio chart

- PE 26-27 is considered to be a strong sell
- but S&P 500 PE once reached 40 and later it hit 65

- both were abberations
- the first time was during the dot com rally and subsequent crash
- the next time was during the 2008 financial crisis when EPS dropped extremely fast but prices did not correct with same speed thus leading to an inflated PE

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