dancing diva

Stock Valuations On the Rise

Your P/E exercise is misleading and therefore worthless since it conveys the idea the stock market is expensive.

The s&p p/e is high because the "e" in both the financial and consumer discretionary areas have fallen, and these two sectors make up about 29% of the s&p (as of Sept 2007 although it's probably lower today). When one takes a look at the other sectors, where earnings are actually growing because they are heavily tied to the world export market, p/e's are not particularly high on a historical basis and in most cases are lower than a year ago. This was especially true before the latest rally.