S&P 500 P/E ratios. The current ratio is 20.22 which includes the financials having the advantage of an extremely steep yield curve to boost their earnings. The S&P closed 2007 with a P/E ratio of 22.19. The historical average is around 16 and in the the late 70's and early 80's the P/E ratio was around 10. The low was a P/E of 4.78 in the early 1920's then shot up to a P/E ratio in the 35 range prior to the 1929 crash then fell to high single digits after the crash of 1929. The the P/E ratio shot up over 20 again in the early 1930's only to fall back down to the 12 range in the late 1930's. If the financials perform the way I think they will earnings for the S&P will be affected in a big way. All that has happened is the debt was just moved onto government balance sheets around the world nothing has been fixed. Time will tell.
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