Stock Market in Historical Perspective 2

Price Relative to Earnings 1881-2005

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Upper Curve: Price to Earnings ratio, Jan 1881 to Jan 2005

(= real S&P Composite Index / moving average of preceding 10 years of real S&P Composite Earnigs)
Lower curve: Intereste rate; Yield of US long-term US Government bonds (nominal)

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Source: Schiller, Irrational Exhuberance.
Calculations by the Author using data from S&P Statistical Service; US Bureau of Labor Statistics; Cowles and Associates (Common Stock Indexes); Warren and Pearson (Gold and Prices)