The P/E ratio effect is the tendency for low P/E portfolios to outperform high P/E portfolios. Historically this has been true by a significant margin regardless of using a market average or industry average to define what is low or high. However, between 1999-2019 this outperformance greatly declined. In the period of 2000-2009 low P/E portfolios on average outperformed their high ratio counterparts by .8% to 2.2% on a monthly basis. By 2019, this outperformance declined to near zero. When applying the four-factor Carhart model to the portfolios, the decline in the P/E effect can largely be explained by the decline in the significance of the HML factor and a stronger association between low P/E portfolios and large-cap portfolios represented by the SML factor. This may be an indication of markets becoming more efficient, assuming P/E ratios are a weak proxy for risks.