Price to earnings ratio

[Iron]

An interesting observation (from http://www.ritholtz.com/blog/2010/12/10 ... t-outlook/):

'[US] stocks are overvalued at the present levels. For December, the Shiller P/E ratio says stocks are now trading at a whopping 22.7 times earnings! In normal economic periods, the Shiller P/E is between 14 and 16 times earnings. Coming out of the bursting of a credit bubble, the P/E ratio historically is 12. Coming out of a credit bubble of the magnitude we just had, the P/E should be at single digits.'

Jeff