I’ve posted Entry #372 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called The Bull Market Has a Long Memory of Bearish Times — and That’s Okay!
Juicy Excerpt: More importantly, I don’t think that Shiller would say that the P/E10 metric offers precise guidance. Using the median for earnings rather than the mean pulls the number from the very, very scary high of 31 down to just the very scary high of 28. That’s not much of an improvement. The 32 reading is especially alarming because it is so close to the reading that applied in the days just prior to the Great Depression. But the full reality is that there has never been a time when the P/E10 rose to 25 when we did not suffer an economic crisis in the days that followed. The mean-adjusted reading of 28 is plenty dangerous itself.