From Newsmax:

Bulls say stocks are a good deal because surging earnings make price-to-earnings (P/E) ratios low by historical standards. "A close study of the numbers shows they are wrong," writes Shawn Tully, senior editor at large for Fortune magazine.

Bulls point out that the S&P P/E ratio, based on profits over the last 12 months, is 13.6, far below the average of 18 over the last 23 years. On the face of it, earnings are up and P/E ratios are historically low. Yet, stocks only look cheap, according to Tully.

(The P/E ratio of a stock is a measure of the price paid for a share relative to the annual net income or profit earned by the firm per share. The P/E ratio can therefore be calculated aggregately by dividing the company's market capitalization by its total annual earnings.)

However, the current P/E ratio is a poor measure of stock values because...

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