Current S&P 500 Normalized P/E Ratio: 37.50 (+13.5% vs last year)
Dec 31, 2024
| Historical average: | 15.3 |
Price to earnings normalized ratio is based on trailing twelve month adjusted earnings. For example, in years like 2008, companies still make profits since the losses are mostly caused by non-reccurring intangible charges. Net profit margins, excluding intangible and one-time charges in recession times, have been quite stable in history: around 6%. In periods like the late 1920s or the late 1990s, net margins increased to the 8-10% zone, but this did not last.
Source:
Robert Shiller and his book Irrational Exuberance