I'm very curious about what was going on in the markets/business world from 1946-1950. This period saw a slow and steady gain in the major indices and a dramatic drop in PE ratios. I'm trying to understand the context by which PE ratios dropped so severely (higher earnings I suppose), while the market indices had slow and steady growth. Thoughts Appreciated, Matt
mattjclark I can recall the mood of people in that time frame. It was a feeling that we deserved some time to improve our own lives after WW2 rather than focus on supporting the war. It was also a time to make up for the depression. Women had a lot more voice in how money was spent as they had earned quite a few paychecks working for the war effort. The depression was still deeply imbedded into people and paying higher prices (higher P/E ratio?) was just not the thing to do. The people would not have had a 'dot.com' bubble so soon after the 1930's and WW2. A different mind set was in play IMHO from '45 to 48. There was a faster change in the 1950's. The 1960s was even faster paced.. This is more about my personal reflections of people back then rather than the mood inside the stock market.. but both are linked. agpilot
Thank You agpilot, that's just the kind of useful information I was looking for. It does make sense that in the anticipation of the end of the war there were probably some pretty lofty beliefs (ie. high p/e ratios) of what the future would bring. Then when the war was over some reality set in, remembrance of the 30's etc. set up a certain environment where profits were rising but the markets didn't keep pace. Too bad the markets can't catch a little bit of that reality bug today. Thanks again, Matt