Historic Event: the S&P500 index has its first loss in the history of the index. The S&P500 will see approx $26 of earnings for calendar year 2008. (2007 saw $66).

S&P500 at current levels

$780  /  $26 = 30 (P/E ratio). Long term as-reported P/E is 15.  The S&P500 is over-priced (by 2X?).

Dow Jones Facts:

  • Of the 88 20-year periods in the 20th century, only 9 periods saw average returns of 9.6% or better.
  • Half of the 88 20-year periods saw returns of 4% or lower – and this is before transaction costs, asset management fees, and taxes.
  • Average return from 1900 to 2002 was 7.2%.
  • Guess how many years out of that 103 years saw returns between 5-10%?  Try 5.
  • Almost 70% of the time, the Dow’s annual return was either higher than 10% or less than -10%.
  • Half of the 103 years saw either a gain or loss of greater than 16%.