Take the P/E 10 Ratio With a Grain of Salt

The P/E 10, which looks at the 10-year rolling average of the S&P 500's price-to-earnings ratio, is a tool used to "smooth out" shorter-term (year-to-year) fluctuations in total S&P 500 corporate profits. It does not use "adjusted" earnings (which eliminate non-recurring items).

This is how the P/E 10 looks right now, compared with where it has been since 2003. The historical middle quintile for P/E 10 ratios has been 14.3x to 17.3x....378 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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