What seems bad might be good. The sinking stock market has been bringing the price-earnings ratio of the Standard & Poor's 500 index closer to its historical trend line, meaning the decline may be reaching a bottom. By early April, even after the April 4 rally, the p/e ratio for the S&P 500 had dropped to 21.7, according to S&P. (It had been below 20 a few days earlier.)

That's much closer to the average of 14.5 for the index's 170-year history, according to the Federal Reserve Bank of Kansas City. In June 1999, it stood at 36, and dropped to 29 a year later, according to the Kansas City Fed. While the decline is painful, it's good news that the end is in sight—at least if history has any meaning.

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