Wednesday/ Dow 15,000 .. where to next?

The ‘crisis’ in the Dow Jones pre-crisis and post-crisis the the Wall Street Journal refers to in its front page article about the DJIA reaching 15,000 for the first time on Tuesday, is the Lehman Brothers/ World Financial/ Great Recession crisis of 2008, of course.  But there are other crises that have certainly not played themselves out fully – such as the European debt crisis, the repeated US debt-ceiling wrangles in Congress and the US unemployment crisis.  And the USA is still awash in cheap money with the Federal funds rate sitting at zero almost 5 years after 2008.

Dow 15 000 v2 sm
From the front page of today’s Wall Street Journal
S&P 500 PE ratio
Here’s a better view of what’s really going on .. the historic average P/E ratio of the S&P 500. The ‘now’ referred to in ‘is falling sharply now’ is Aug 2010. (I couldn’t find an up-to-date graph).  The average S&P 500 P/E ratio today is about 15 or 16 – so it has stabilized (or is heading up again?) and sits at about at the long term average.

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