/biz/ - Business & Finance

As an example, the S&P 500’s P/E ratio in 2009 was 70.9, which would be wildly overvalued. In reality earnings were depressed causing a high P/E ratio even though market sentiment was negative. The PE10 ratio was at 15.2 in 2009, well under its mark of 24.0 the year earlier, accurately showing the better valuations during the depths of the Great Recession. This article uses both P/E and PE10 ratios for thoroughness.