With the Dow now at 6,547.05, it seemed like as good a day as any to revisit this article from the December issue of Fortune.

Dow 4,000. Food shortages. A bubble in Treasury notes.

Fortune spoke to eight of the market's sharpest thinkers and what they had to say about the future is frightening.

Here's what Bob Schiller had to say about P/E ratios:

In terms of the stock market, the price/earnings ratio is no longer high. I use a P/E ratio in which the price is divided by ten-year average earnings. It's a really conservative way of looking at it. That P/E ratio got up to 44 in the year 2000, which was a record high. Recently it was down to less than 13, which is below the average of around 15. But after the stock market crash of 1929, the price/earnings ratio got down to about six, which is less than half of where it is now. So that's the worry. Some people who are so inclined might go more into the market here because there's a real chance it will go up a lot. But that's very risky. It could easily fall by half again.

From a few days ago:

If the exceptional monetary stimulus since September produces inflation, or the unprecedentedly large budget deficits in fiscal years 2009 and 2010 “crowd out” private investment, then growth and earnings prospects for the next few years would be below average. In that event, the market as it stands today would be overvalued.

From last week:

This link is extremely useful. DJIA still looks expensive by this measure!

On 2 March, we had a (1-year) forward P/E of 10.81 for DJIA; one week later, the 12-month forward P/E is down to 9.91. The (1-year) forward P/E for the S&P 500 is down from 11.90 to 10.36.

Are we on track to fulfill Schiller's "fall by half again"?

From last month:

Rather than rely on Wall Street Analysts who are chock full of the conflicts, and seem structurally incapable of catching major economic turns, let’s revisit a long term look at P/E ratios, via historical cycles.

The key point of the chart is that earnings and P/Es are cyclical.

From last October:

In August 2007, the 10-year price-earnings (P/E) ratio was 27.

In October 2008, the 10-year P/E ratio is 14, below the 100-year P/E (15.5) but above the "long-run average" for the depressions of the 30's and 80's (6).

Fall By Half Again? If Only!