The current S&P 500 P/E ratio is around 24. That is historically overvalued (the median is around 14.7, mean 15.7). Yet the new normal might be a P/E of around

The current S&P 500 P/E ratio is around 24. That is historically overvalued (the median is around 14.7, mean 15.7). Yet the new normal might be a P/E of around 20 (though who pays 20X one year of earnings for a business unless it is growing like crazy). Of course the last time we were at the mean was at the bottom of the 2010 recession. Just to compare in the 2001 recession we hit a P/E of around 45, during the 2010 recession we hit a P/E of 65. Obviously it is a lagging indicator as the ratio goes through the roof because earnings drop through the floor. The market can go sideways for a long time (and has historically). During the obama years that is essentially what happened. Sideways with a slight increase actually feels like a pretty decent economy (especially after 2010).