Cheap Enough?

Is the stock market cheap by historical standards? An article by David Leonhardt in today's NY Times tries to answer that question. There are two problems in trying to answer: 1) The bull market of the last twenty years skews the average P/E upward. It's a bit like averaging the net worth of 100 random people with Bill Gates as one of the folks chosen at random. 2) The E in P/E, corporate earnings are probably on the decline for awhile and we don't know by how much.