Question: Look at Figure 2.3 in Chapter 2, which tracks median PIE ratios from 1963 to 2010. Explain why PIE ratios were low in the 1970s

Look at Figure 2.3 in Chapter 2, which tracks median PIE ratios from 1963 to 2010. Explain why PIE ratios were low in the 1970s and high in the 1960s and 1990s.

Figure 2.3

90 -p25 Median *p75 p90 -pl0 80 70 60 50 40 30 20 10 1963 1968 1973 1978 1983 1988 1993 1998 2003 2008 Price-to-earnings ratio

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