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Graph of the Week: Price-Earnings Ratios Across Nations
J. Bradford DeLong
- In the world as a whole, more countries' price-earnings ratios fell in 2000 than rose.
- Thus there is some sign that worldwide price-earnings ratios have beenr eturning to sanity: in the past price-earnings ratios above 20 have always proved unsustainable.
- The U.S., however, saw its price-earnings ratio rise in 2000.
- Japan's very high price-earnings ratio this year reflects not high stock valuations, but extremely low profits. In aggregate the profits of Japanese companies were negative in 1999, hence the price-earnings ratio cannot be calculated.
Source: Morgan Stanley Capital International, via the Economist...
Professor of Economics J. Bradford DeLong, 601 Evans Hall, #3880
University of California at Berkeley
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