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Strategies & Market Trends : Stock Attack II - A Complete Analysis
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To: TechTrader42 who wrote (14681)8/11/2001 5:49:47 PM
From: Mark L.  Read Replies (2) of 52237
 
Yes, the bear market is over. With the S&P 500 trading at 32 times earnings -- vs. a historical average of 14.5 -- it was a kinder, gentler bear market.

The historical average 14.5 is the overall average for trailing earnings. During troughs in the business cycle S&P PE's have averaged higher.

There are many ways of calculating trailing earnings for a non-current index like the S&P, but the technique I use yields a 29 PE. If you use actually reported "as reported" trailing earnings, the PE is 26. If you use actually reported trailing operating earnings, the PE is 22.5. If you use projected 2001 earnings (which is the metric I suspect you used), then the historically equivalent PE (projected vs trailing) during business troughs would probably be around 20 (hard to get historical data, though).
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