Tuesday, August 18, 2009

Is the stock market over-valued?

Shiller's famous P/E graph says the market was about where it should be, on July 17, when the market was at 940. The recent stock market rally would put the P/E ratio a little above its historical average. Also, the ten-year moving average of earnings is historically high which would also tend to make the P/E appear lower than it really is. Bottom line: the market may still be above its historical P/E.

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