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I've said this on about 50 threads, but it is worth repeating. The S&P 500 P/E is 34. The historical average is 15. The typical bear market trough tends to overshoot and go down to 8-10. If history is any guide, this market has another 50-70% to fall. (15/34=.44, or a 56% drop). These are facts. Whether history repeats or not, that is something each investor must decide for themself. If you think the bottom is near, you should be aware of how much this bottom will deviate from historical precedents.

Pinging your post #8, can't argue with those facts. I also mentioned on another thread that investors will deal with losses in typical stages although they will not all be in the same order. In denial they stay in the bear market. In anger they start to sell, call for Congress to skin some CEO's etc. In bargaining they will cut spending and perhaps sell their houses. Depression and acceptance will be healthy signs, but those seem to be a ways off.

Of course that doesn't help to predict the market, but may predict how it affects the rest of the economy.

On what do you base your P/E evaluation?

My numbers show that the trailing P/E of the S&P
excluding one time charges is about 18. With
interest rates this low, that's certainly within
historical norms.

I've said this on about 50 threads, but it is worth repeating. The S&P 500 P/E is 34. The historical average is 15. The typical bear market trough tends to overshoot and go down to 8-10. If history is any guide, this market has another 50-70% to fall. (15/34=.44, or a 56% drop). These are facts. Whether history repeats or not, that is something each investor must decide for themself. If you think the bottom is near, you should be aware of how much this bottom will deviate from historical precedents.

Obviously you ignore data that does not fit your theory!

Good points but I hope you are wrong....aside from the notable exceptions like AOL, WorldCom and Enron, most of the S&P is still reporting profits and indeed most are higher than for the same period last year. Are we to return to a market based on P/E in the 8-12 range like in the 70s? I don't know but with interest rates so low and debt rates paying hardly squat, I don't think we will. It would appear that many folks and institutions have simply gone to cash and are waiting. I know some have gone to gold based or bond indexed havens but that is not reflective of the average 401K investor or mutual fund manager. We now live in a world of very large hedge fund players who give an artificial momentum to a bear market(or a panic too for that matter) which simply did not exist 20 or 30 years ago. Also, inflation is virtually nil or item specific. I would agree that the P/Es of the 90s were foolish and the stock prices reflected expectations (or subscribers) more than reality. That we are correcting this after the Tech Bubble Burst is not suprising yet as I'm sure you know, Microsoft has weathered all of this better than most and yet their P/E is still quite high....around 50 I think. I still say that psychology and media frenzy over the few disgraced companies is aside from the unexpected nature of terrorism our greatest liability.

In any event, I'm hoping for a stable close by tommorow afternoon. It should be an interesting morning. Back when I was a daily investor, I learned that the market usually recovered when I panicked. This time I'm not so sure but I feel almost certain that as Churchill said "It's the end of the beginning" at least.

The S&P 500 P/E is 34. The historical average is 15.

I agree. With earnings still fairly strong, the market remains oversold.