July 26, 2009 2:42 PM
dshort.com has a good piece showing the PE ratio based on as-reported earnings and actual prices. Here’s their chart. It doesn’t look cheap to us – what do you think? If the PE ratio falls by half, then reported earnings have to double for the stock market level to not fall further.
As TPC points out, using actual reported earnings is the only way to keep emotion out of the analysis.
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