Go Read

Go read over at Doctor Ed's Blog, "Valuation and the Fed Model".

I think this is the key quote:

"At 2%, the 10-year Treasury bond yield has an effective forward P/E of 50, implying that stocks trading at a forward earnings yield of 5.9% and a multiple of 17 are grossly undervalued by as much as 62%. Of course, this 'Fed Model,' as I first named it back in July 1997, has been showing that stocks are undervalued since the Tech bubble burst."