John Authers at FT has a good piece about long term price to earnings ratios. The bottom line is that:

…last year stocks were never nearly as undervalued as they had been at the previous great bear market lows.

…the Shiller data still suggest that stocks needed to get much cheaper than they did at last March’s low before they could start a true renewed bull market. His cyclically adjusted p/e fell to 5.8 in 1932, and 6.6 in 1982. Last year, it started to rebound at 13.3. Surely this is not the compelling cheapness that is needed for a new bull market?

Perhaps earnings will have risen some before the next test of the March 09 low (if there is one) so that the next time the p/e will be closer to the 6 or 7 required for a true bull market.  We’ll cross that “brideg when we get to it…