[phjohnst]

Real vs reported means that the real numbers have been adjusted for inflation from some base year (and looking at the CPI from his data, the base year is mid 1983). The problem with looking at such a huge data set (this goes back to the late 19th century, is that the companies, industries and the world that we live in shifts significantly over time. So the 'real' numbers are extremely important, but I'd have to do some more research to find out how his CPI calculations change from one era to another. This is important because (to the best of my knowledge) there is nothing that says that the P/E ratio of a major industrial company in the 30s (thinking like Rockefeller, etc.) is equivalent to that of a big tech company now. So as industries change, investment attitudes, etc. change, which will affect the overall P/E.

And as far as the market being expensive in relation to historics, again you have to compare apples with apples. There are more people investing now than 50 years ago, and there are more big companies. Both of these facts will drive up the price of the mainstream companies' shares.