Tuesday, December 8, 2009

Stock Market P/E Skyrockets

Stock Market P/E Skyrockets: "

The stock market is way over priced if you use the price-earnings ratio (P/E) of the S&P 500 as a gauge.

The dramatic rise in the S&P 500 since the market bottom in March (up 60%) has not been accompanied by or driven by an increase in earnings.

Indeed, if you understand P/E as investors' anticipation of higher prices, you would think a super bull market is just around the corner.

On the other hand, it can also mean a price bubble driven by speculation that can burst in any moment.

Do you really think a super-bull market is coming?

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Stock Market P/E Skyrockets originally appeared on About.com Stocks on Monday, November 16th, 2009 at 22:42:48.

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