By Paul Price
High interest rates justified extremely low P/Es in the late 1970’s – early 1980’s. When investors could get as high as 15% – 18% on insured bank CDs, they had little appetite for stock market risk.
Today, with near-zero interest (ZIRP) available on CDs, bonds and money markets, P/E multiples should be greater than average.
Instead the forward multiple is barely above the long-term average. Relative to fixed income, stocks are still cheap.