By Daily Crux Editor Brian Hunt:

After one of the greatest rallies in history, stocks are much riskier now than they were in March.

As the WSJ reports, the yardstick of "normalized" earnings used by many analysts indicates stocks aren't cheap. Normalized earnings compares stock prices to their 10-year trend of earnings. This measure "smoothes" out peaks and valleys in the numbers.

The WSJ cites Yale professor Robert Shiller's take on normalized earnings and their relation to current stock prices:

In March, his normalized P/E ratio dropped toward 13, its lowest since 1986. Now the measure is close to the historical average, with a reading of 15.9 at last Wednesday's close of 920 for the S&P 500. That's a reading that suggests "average returns for the next 10 years," Mr. Shiller says.

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