For those interested, below we highlight the historical trailing 12-month P/E ratio of the S&P 500 since 1942. The green and red shading represents bull and bear markets of the S&P 500. Bull markets are rallies of 20% that were preceded by a decline of 20% and vice versa for bear markets. Generally you see P/E expansion during bull markets and P/E contraction during bear markets. However, the most recent bull market saw P/Es contract from high levels, and during the recent correction, P/Es have expanded. The current trailing 12-month P/E of the index is 20.5 versus an average of 15.90 since 1942.
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