The strong compression of price-earnings multiples, both in the United States and in European and Japanese markets, also would appear to limit the possibilities for Fundamental Indexing™ to produce returns that are higher than those of the broad market indexes. During the late 1990s and early 2000 price-earnings multiples in the . market were unusually disperse. Just over one quarter of the stocks in the Standard & Poor’s 500 Stock Index were within 20 percent of the median P/E multiple of the market. As of 2006 and early 2007, however, well over half the stocks in the.
