• What happens to the expected equity premium, when the common stock P/E ratio reverts toward historical norms? - Personal Inv...
  What happens to the expected equity premium, when the common stock P/E ratio reverts toward historical norms? - Personal Investment Management > Investment Returns and Securities Market Risk Premiums Articles - Financial Articles, U.S. equities prices have had a long term tendency to revert toward their average price to earnings ratio. In the 1980s and 1990s, the PE had increased substantially above the long term average. Much, but not all, of this reversion occurred in the first five years of the 21st century.
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