A century of stock market history: Share price levels in early 1972

 The last study you looked at was Lawrence Fisher and James H. Lowry, "Rates of Return on Investments in Common Stock: The Year by Year Record, 1926-65," The Journal of Science Vol. XII, No. 3 (July, 1968), pp. 291-316. See http://library.dfaus.com/reprints/workofart/ for a summary of the broad implications of this study.The 'price/earnings ratio' of a stock or a market average such as the S&P 500 stock index is a simple measure to determine market sentiment. If for example a company earned a net income of $1 per share in the past year, and its stock is selling at $8.93 per share, its 'price/earnings ratio' would be 8.93. If its stock is selling at $69.70 per share, its 'price/earnings ratio' would be 69.70. Generally, a price/earnings ratio (i.e. 'P/E' ratio) below 10 is considered low, a ratio between 10 and 20 is considered moderate, and a ratio of 20 or above is considered expensive.