The Great Debate: Bull's Argue Valuation

I heard this the other day on TV and thought I'd pass it along because I think its a great synopsis on the bullish argument on valuation. Here is what's at the core of their thinking.

"Low levels of both core inflation and interest rates suggest that the normalized P/E on stocks should be in the upper teens (18 to 19), not the historical average of 15 times. Consensus earnings estimates for the S&P 500 for 2010 have been moving up in recent weeks, a process that will likely accelerate when third- and fourth-quarter results exceed expectations. Consensus estimates currently stand at around $75.00 for the S&P 500 for 2010 earnings. Therefore, 18 times $75 gets us to 1350, 25% higher than we are now."

Just passing along what I heard. You'll see my take on the bull/bear debate after the third quarter ends.

*Long ETFs related to the S&P 500.