After years of being overvalued by one of the tougher value metrics — the 10-year P/E ratio made famous by Yale economist Robert Shiller — stocks finally appeared undervalued a few few months back. Now, with stocks having surged some 35% in the past three-plus months, the broader market is back up to “fair value” levels according to the Shiller P/E, The Business Insider’s Henry Blodget reports.
“The market’s [10-year] PE right now is about 16X, smack-dab in line with its 130-year average,” Blodget notes. While that means stocks aren’t as cheap as they were a couple months ago, it doesn’t mean stocks aren’t good buys: “This suggests that stocks are priced to return about 7%-9% per year for the next decade,” Blodget writes. (Click on chart for full data compiled by Shiller.)