How Cheap is the Market Right Now?

How cheap is the market right now?

The answer will probably surprise you.

The again, if the 'E' part of the P/E ratio continues to grow to all-time highs, will a lower P/E ratio really be that big of a surprise?

The root of this conversation started in this entry at "Crossing Wall Street"...but, the basis of the conversation made it all the way to Larry Kudlow's Kudlow & Company on CNBC tonight. (Link to Kudlow's Blog)

This entry at "The Big Picture" takes a deeper look at the current situation.

Eddy observes "S&P 500 is now trading at just under 16 times trailing operating earnings. The P/E ratio hasn't been this low since October 1995." Note that he references actual trailing earnings. This is more accurate than using forward forecasts, which tend to be very wrong at key turning points.

The real good comments about the topic are found in The Big Picture's follow up: "Will Cheap Stocks Get Cheaper".

Today's rising market further supported the perspective of some pundits to whom I have listened over the last week who cite the following: despite the volatility and sell-off that we have experienced the last few days, the lows that were set on the broader indexes in the middle of May have served to produce a floor. They feel as though the market it catching its breath and the fact that the indexes have found support at these levels is a positive sign.

I'm not sure how much longer the market can withstand the downward pressure with the slow and (traditionally) painful doldrums of summer approaching. But, times like these are when the good money gets made.