P/E should be an easy ratio: price of the stock divided by its earnings. For an index such as SP500: price of the index divided by the weighted earnings. For long-term studies, the ones we use in this web, when we want to compare different periods of time, using just one day (for instance 31 December) cannot represent a full year adequately, though. Instead we could get all the closing daily prices for the year and average them and use this new number as P (Crestmont approach). Professor Schiller provides monthly data for the P/E, where P is daily average across the month, and E is extrapolated from the quaterly reports of the companies.

However, Schiller´s most famous index is the

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However, Schiller´s most famous index is the

**P/E10**where P is the inflation adjusted price and E is the prior ten-year mean of inflation-adjusted earnings (methodology**here**). This is the approach we will use throughout this web. We can get updated data from www.multpl.com. The historical average of PE10 is 15.5 (we will use**16**). For the Cresmont methodology 14. In general both methodologies are quite similar, Schiller being a little bit higher in general when above 15.Go back to SimplyNorisk.