Brace for Reversion to the Mean By Rich Masino About this article: It seems that just about everything in the universe is mean-reverting. I don't care whether it's the average annual snowfall in Buffalo, the number of monthly speeding tickets issued on I-495 or P/E ratios, one way or another mean reversion will have its way. According to my Value Line Publishing chart, the long-term average P/E ratio on the Dow is 14.5. However, 16 times in the last 88 years the ratio has sunk below 10. Below 12, the frequency increases by another 11 events -- that's a significant 31% of the time we see below-trend P/Es. But investors haven't experienced such a low ratio since 1988. It's going to happen again, it's just a question of when. Given the depth of the financial crisis and the as-yet-unknown depth of the consumer-led global recession, it's not unreasonable to think that we may soon revisit the ugly side of... Or, call us at 1-866-321-TSCM (8726) Monday-Friday, 8 a.m.-6 p.m. ET. Outside the U.S. and in Canada, call 1-212-321-5200. More Stories From RealMoney Durable Goods Up Move Down the Tech Food Chain Jobless Claims Still High Bulls' Tenacity Is the Big Question Mark Should You Buy It? Pharmaceutical Product Development Bad News Trumps All Support for Banks Holds, For Now Bummer, Yields Are on the Rise Money on the Line Makes a Big Difference Structured Products: Unsafe at Any Price MORE STORIES FROM REALMONEY

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