I can't help but commenting more on the Figure 10 of the Yardini report just released this past Friday, 11/4/11.
The chart covers a lot of years since 1999, and it doesn't have horizontal lines to make it a little easier to read, but look at how that P/E has been trending down from the left side of the chart. The exception has been the very low level in late 2008, early 2009 to mark the recent recession.
This downward trend is in line with many, many of the observations we write about on a daily, weekly, and monthly basis. Looking at the many tables that are posted, the PEs have been coming down - I call it ratcheting down as we go forward to take care of the ever increasing risk in the U.S. and World economy.
I keep the same type of data, in the same manner, today that I did back in the 99/00 era. PEs in those days were up to several times higher than they are today for the semi stocks.
It is hard to say when this situation will turn around, but for the moment as I look forward, nothing comes to mind that will change in the near term. The question is - how low is that S&P-500 PE going to go before it turns around and starts an uptrend? |
