Today’s chart illustrates the price to earnings ratio (PE ratio) from 1900 to present. Generally speaking, when the PE ratio is high, stocks are considered to be expensive. When the PE ratio is low, stocks are considered to be inexpensive. From 1900 into the mid-1990s, the PE ratio tended to peak in the low to mid-20s (red line) and trough somewhere around seven (green line). The price investors were willing to pay for a dollar of earnings increased during the dot-com boom (late 1990s), surged even higher during the dot-com bust (early 2000s), and spiked to extraordinary levels during the financial crisis (late 2000s). Since the early 2000s, the PE ratio has been trending lower with the very significant but relatively brief exception that was the financial crisis. More recently, due to rising stock prices and declining corporate earnings, the PE ratio has trended higher and has just made a new post-financial crisis high and is now at a level that prior to the 1990s would have been considered very high.

Quote of the Day
“Price is what you pay. Value is what you get.” – Warren Buffett

Events of the Day
June 29, 2015 – Wimbledon tennis tournament begins (ends July 6th)
July 01, 2015 – Canada Day
July 04, 2015 – US Independence Day
July 06, 2015 – Running of the Bulls begins in Pamplona, Spain (ends 7/14)

Stocks of the Day
— Find out which stocks investors are focused on with the most active stocks today.
— Which stocks are making big money? Find out with the biggest stock gainers today.
— What are the largest companies? Find out with the largest companies by market cap.
— Which stocks are the biggest dividend payers? Find out with the highest dividend paying stocks.
— You can also quickly review the performance, dividend yield and market capitalization for each of the Dow Jones Industrial Average Companies as well as the performance of the  Dogs of the Dow.

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