The stock market correction has given us the gift of low prices. Better act fast, these deals won’t last.
Here’s the Value Line median of estimated P/E ratios for all stocks with profits, during the last six weeks:
May 6, 2011: 17.3
May 13, 2011: 17.2
May 20, 2011: 17.3
May 27, 2011: 16.1
June 3, 2011: 15.9
June 10, 2011: 16.5
For comparison purposes, the A&P 500 broke out of the bear market in July 2009. The reading on July 24, 2009 was 15.1. Prices are reasonable. Stocks are worth buying.
I believe the correction is money flowing from asset class to asset class. I think its coming out of commodities and flow into Blue Chips, which have P/E’s lower than the current average of 16.5 and most pay healthy dividends.
