Email of the day (1)
Comment of the Day

November 28 2011

Commentary by Eoin Treacy

Email of the day (1)

on long-term P/E ratio and Dividend Yield charts for stock market indices:
"Would much appreciate if you can provide the following charts from Bloomberg:

(1) long-term (50 years?) daily or weekly PER graph, and
(2) long-term (50 years too?) daily or weekly DY graph

for each of the following indices:

(a) S&P 500
(b) Nikkei 225 (P/E, DY)
(c) Euro Stoxx 50 (P/E, DY)
(d) FTSE 100 (P/E, DY)
(e) Malaysia's KLCI, with Bloomberg code FBMKLCI:IND (P/E, DY)

"Many thanks in advance."

Eoin Treacy's view Thank you for these requests. As mentioned previously we do not have access to a data feed supplying P/E ratio and dividend yield information. I have attached charts for the above indices from Bloomberg. However Bloomberg does not have 50 years of data for these indices.

Additionally, it should be noted that Bloomberg quotes P/Es based on operating earnings as opposed to reported earnings. The latter are based on Generally Accepted Accounting Principles (GAAP) while the former allow for many more write-offs in the form of "one-off items" Since operating earnings have come more into vogue over the last two decades it is questionable whether long-dated P/E charts are truly reflective of historic market conditions.

The P/E ratio chart for the S&P 500 posted on www.multpl.com is based on Dr. Robert Shiller's data set and uses a 10-year average of earnings which helps to smooth out spikes in individual years. This site also has long-term dividend yield charts.

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