Ghost of Igloi wrote:
price to sales ratios are one of the best, and most under-rated valuation measurements.
the problem is that comparing companies across industries like this graph does...doesnt' make sense.
The spx is much more tech dominated than in the past...and tech companies deserve much higher price to sales ratios than old line industrial companies.
So it's not a surprise that price to sales ratios have gone up as tech has become a larger part of the index.
This is one of the many problems of leaning too hard on valuation...it's not apples to apples over decades, so the message you think you are getting...is inaccurate.