The S&P 500 and Earnings

Here’s a chart of the S&P 500 (black line, left scale) and its earnings (yellow line, right scale). I scaled this graph at a ratio of 16-to-1, so whenever the lines cross, the P/E ratio is exactly 16. As you can see, even as the market has risen and sold off, the market is basically following earnings pretty closely.

Posted by Eddy Elfenbein on May 1st, 2008 at 10:14 am

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