S&P500 PE Ratio

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Chart courtesy of http://www.chartoftheday.com

Today’s chart illustrates that the recent growth in earnings has led to a significantly lower PE ratio (now near 17). In fact, the PE ratio is currently within the confines of a tight and very steep downtrend. So while the significant earnings growth of late is a plus, the market does not appear willing to pay more for each dollar of earnings.

Very soon the markets will tell the real story...