The Stock Market Is On Sale. That Doesnt Make It Cheap.

The valuation of the US stock market has fallen faster than in the aftermath of the dot-com crash, recording the biggest six, 12 and 18-month drops since data on price-to-forward-earnings ratios began in 1985. That should be only a slight consolidation to investors.

Start with the good news, such as it is: Cheaper stocks are a good thing for those investing now, and theyve become a lot cheaper in a very short time. The S&P 500s valuation hasnt fallen quite so fast as the overall market, but on a longer-term measureYale professor Robert Shillers cyclically-adjusted price to earningsthe drop from Novembers peak was bigger over such a period only twice since 1881, after the 1929 and dot-com crashes.