“Historical norms fail in the face of massive deregulation and the slashing of the corp tax rate.”
There are two ways to bring the P/E ratio back toward the norm - lower stock prices, or higher corporate earnings.
Prices don’t need to go down, but their growth could be sub-par, while earnings catch up. Earnings would have to double, to bring the P/E back to 16 - that would take years of great growth.
How much of the CEO compensation is based on stock price vs earnings?