Historical P/E of the S&P 500. Where Were the Value Investors in 2007?

Where Were the Value Investors in 2007?

To say that value didn’t work for investors in 2008 means that investors had to take a value approach in the first place in 2007 and before. Just how valuable were stocks before the bottom fell out of the market? Here’s a look at historical P/Es of the S&P 500 every quarter since 1936:

The consensus is generally that the average P/E of the S&P 500 is around 10; it’s not. Since 1936, the S&P 500 has averaged 15.8.

But in late 2008 the S&P’s price to earnings ratio had risen to the mid 20s. In fact, they hadn’t touched that 15.8 average in 13 years. For the first two quarters of 2008 before stocks went into freefall, the S&P’s P/E ratio averaged just over 23… 45.5% higher than the historic average.

http://www.rhinostocks.com/2009/04/is-value-investing-dead-not-on-your-life/