stahleyp Posted August 8, 2011 Share Posted August 8, 2011 Right now the Shiller PE is around 19 - a bit higher than the long, long term historical average, but right around its 45 year average. However, in an article from the WSJ this was stated by Burton Malkiel: "First, I believe that stocks today are cheap. Price/earnings multiples are just over 14 and forward P/E multiples, which use forecasted earnings, have shrunk to less than 12. These multiples are low relative to historical precedent and are especially low when considered in comparison to a 10-year Treasury yield of 2.5%. Dividend yields of 2.5% also compare favorably with 10-year Treasurys. Multiples do not look cheap relative to average 10-year earnings (the so-called Shiller P/E multiples), but today's earnings are so much higher than average earnings that a 10-year average is not a good estimate of today's corporate-earning capacity. Do you guys think he is right with that? Here is the full article for those who are interested: http://online.wsj.com/article/SB10001424053111903366504576492512709525754.html Link to comment Share on other sites More sharing options...
bluedevil Posted August 9, 2011 Share Posted August 9, 2011 No. Right now corporate margins are extremely high. Chances are they regress to the mean. Exactly the reason that the 10-year average has proven a superior valuation measure over time. Link to comment Share on other sites More sharing options...
mhdousa Posted August 9, 2011 Share Posted August 9, 2011 Right now the Shiller PE is around 19 - a bit higher than the long, long term historical average, but right around its 45 year average. However, in an article from the WSJ this was stated by Burton Malkiel: "First, I believe that stocks today are cheap. I don't understand. I thought asset prices represent all publicly available information. Link to comment Share on other sites More sharing options...
Myth465 Posted August 9, 2011 Share Posted August 9, 2011 LOL you cant be serious after last week and this week. Asset prices only represent supply and demand...... Link to comment Share on other sites More sharing options...
mhdousa Posted August 9, 2011 Share Posted August 9, 2011 LOL you cant be serious after last week and this week. Asset prices only represent supply and demand...... What? Stocks don't follow a random walk?!?!?! Link to comment Share on other sites More sharing options...
Myth465 Posted August 9, 2011 Share Posted August 9, 2011 LOL I am from Texas, we dont do sarcasm down here. ;D Link to comment Share on other sites More sharing options...
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