Below we highlight the historical trading range and P/E charts of equity market indices for ten countries. Currently, the US (S&P 500), UK (FTSE 100), France (CAC), Italy (MIB 30), Japan (Nikkei 225) and China (Shanghai Composite) are right at oversold levels, so the risk/reward trade-off favors the reward side at least in the short term. India and Brazil have held up the best during the correction, and Germany and Hong Kong have not been hit so bad either. Looking at P/E ratios, all indices except for the S&P 500 have seen P/E contractions along with their price declines. As shown in the first chart below, the P/E ratio for the US has actually expanded during this correction, highlighting slowing earnings growth. The prior two corrections in the chart were accompanied by a declining P/E.
I always enjoy these charts when you show them. Would it be possible sometime in the future to show the same charts over a longer time frame, perhaps 40-50 years? Thank you
Posted by: Bryan | November 12, 2007 at 02:12 PM
I always enjoy these charts when you show them. Would it be possible sometime in the future to show the same charts over a longer time frame, perhaps 40-50 years? Thank you
Posted by: Bryan | November 12, 2007 at 02:12 PM