S&P 500 P/E Ratios

This is a graph of S&P 500 price to earnings ratios based on Robert Shiller's data. Note that monthly data points in this graph are not based on the current month's earnings because earnings follow a dramatic boom/bust cycle (see the blue line in this graph) and the P/E ratio would be heavily distored at earnings peaks and troughs. Instead it uses the average earnings from the previous 10 years. This results in a more realistic P/E ratio at any specific point in time.