For technical analysts, such a datum signifies that we are in a long term bear market since at least 2007 because the decline persists below 20 percent.
Today the Shiller p/e ratio is 19.79, shown here:
314 percent higher than the all-time low in 1920;
25 percent higher than the median;
20.5 percent higher than the mean;
and 55 percent lower than the all-time high in 1999 -- when a child was born somewhere, to mark that occasion, I am sure. Think of that: To be born at the height of irrational exuberance. I know such a person, but I didn't know the fact at the time.
A crash in the p/e ratio from here to the historical nadir would mean a collapse of nearly 76 percent.
Unthinkable? No. It is not necessary for such a crash to occur from a great height in the p/e ratio.
The collapse to the nadir in 1920 was from a p/e ratio lower than 25, as was nearly the case also in the early 1980s.
Price, and condition, that's all that matters, says the realtor. So should we all say.
