There are some very interesting posts (see links below) over at Ticker Sense that graph out the historical Price/Earnings ratios over the past five years of some well known stocks. For the most part, they indicate that even though stock prices overall all are generally up, the P/E ratios are actually pretty low when compared to the previous several years.
Most notable to me were General Motors, with no earnings, and GE and Boeing, both with pretty narrow gaps between P/E and share price.
Overall, though, these charts make me pretty bullish. Compare these P/E ratios to the dot.com days, and the stock market looks pretty fairly valued, generally speaking. I have heard a lot of talk about an economic slowdown in '07, but with corporate earnings high and going higer, and P/E ratios at very sane levels, combined with a government almost sure to be in deadlock for the next two years, and I think we have the makings for a good run in '07. Perhaps more importantly, even if things do turn sour, it looks like most stocks are valued fairly enough to keeping the bottom from dropping too far.
Or should I be drawing a different conclusion from these charts?
--Chris