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Strategies & Market Trends : Value Investing

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To: Heretic who wrote (6468)3/30/1999 1:37:00 PM
From: Freedom Fighter  Read Replies (1) of 78486
 
>>I am trying to locate a historical study or chart which shows the range of S&P500
returns verses the P/E for the S&P500. In other words, what was the 5 year range of
returns for the S&P500 from points in time when trailing P/E was around 10 --
compared to when it was around P/E 15. <<

One of the problems with a study of this sort is that the PE is affected by two things; the price and the earnings. A high PE does not always indicate a high price if earnings are temporarily depressed. That was the case in the early 90s. Similarly, a low PE could result from peak earnings and not indicate that the market is cheap.

Wayne
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