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Strategies & Market Trends : News Links and Chart Links
SPXL 224.20+0.7%4:00 PM EST
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To: Julius Wong who wrote (3503)11/6/2002 12:11:35 AM
From: Brumar89  Read Replies (1) of 29595
 
Neiderhoffer and Kenner seem to have looked at the overall S&P 500 PE at different points in time.

our simulation studies of the relation between P/Es and returns from 1950 to the present show that the results are consistent with nothing but randomness. Note, for example, that at the beginning of 1970, the S&P 500 P/E was 16 and the subsequent five-year return was -6% per year. At the beginning of 1994, the P/E was 21.3 and the subsequent five-year return was 21% annualized. For periods of seven years or longer, high P/Es are slightly associated with future inferior returns.

Here are studies which concludes PE's are relevant when comparing one group of stocks against another:

oid.com
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