To: Bill Harmond who wrote (14501 ) 10/23/2002 11:48:29 PM From: XBrit Read Replies (2) | Respond to Thanks. The P/E chart I linked was P/OperatingEarnings according to its caption, and that looks about right numerically. "The Market Climate for stocks remains on a Warning condition, characterized by unfavorable valuations and unfavorable trend uniformity. While valuations actually remain extreme on the basis of fundamentals such as dividends, book values, and revenues, the S&P 500 would have to fall only by another 10% or so to place the most optimistic measure - price/peak earnings - at its historical average of 14. This would be no major event however. The historical median is just 11 (a level that we estimate would price stocks to deliver a long-term total return of about 10% annually), and the average bear market low is less than 9. Still, it should be at least some consolation to investors (as opposed to speculators) that the investment merit of stocks is gradually improving. It's just unfortunate that so many speculators convinced themselves that they were actually investors when they were buying stocks "for the long term" at much higher valuations." hussman.com (and scroll to the 10/10/02 comment). Also Hussman's valuation work is covered in Bloomberg Personal Finance Mag, Oct 2002, p. 54. Good article.
