Note: if you find the graph below difficult to understand, see Initial P/E and 20-Year Rolling Returns first.
Scatter Diagram: Starting P/E Ratio vs. 20-Year Stock Market Returns
The above scatter plot (click on image to expand) shows the historical relationship between the P/E ratio of the stock market at the time of purchase and the typical investor's return over the next 20 years. It is exactly analogous to the previously posted Starting P/E Ratio vs. 10-Year Stock Market Returns. And, both are conceptually related to Rolling Returns vs Initial P/E Ratios, which looked at the relationship of initial P/E and subsequent returns over time -- that is, with time as the horizontal axis.
Similar to the 10-year chart, each dot represents a hypothetical