A scary reality lurks beneath the fantasy
By James Mackintosh
Published: February 20 201 (FT.com)The US cyclically adjusted price-earnings ratio, which measures share prices relative to the 10-year average of inflation-adjusted profits, is very high. It stands at 23.7, way above its 16.4 average over the past century or so.
It is now almost exactly at the level reached at the peak of equity valuations in 1966, and very close to the 25 reached in 1901. Only twice has it been higher: in the mania of 1929, and during the dotcom bubble and the ensuing decade. (Entire Article)
