Dear John: It seemed like a bit of an exaggeration when you recently said that the price-earnings ratio for stocks is “off the charts.” The S&P 500 P/E ratio is now 25.78, which is the highest since 2009. But in 2009, it peaked at over 120, which truly was “off the charts.” P.B.

Dear P.B.: Let’s not quibble with the meaning of “off the charts.”

When I last had it calculated, the P/E ratio for the 500 stocks in the Standard & Poor’s index was 17.5-to-1.

But when you take out the fancy accounting and calculate profits using Generally Accepted Accounting Principles (GAAP), the P/E rose to more than 22.

And that was before the recent Trump rally in stock prices.

The average P/E ratio over the decades is about 15-to-1. That means the per-share price of stocks is normally 15 times per-share earnings of those 500 companies.

So stocks are now twice as high as normal.

I don’t want to argue whether that’s “off the charts” or not. But if stock prices suddenly went back to their normal 15 P/E, people would definitely be “out of their minds.”

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