Ben's Modest Proposal: Stocks May Not Beat Cash and Bonds Long Term

Why is the stock market still so high?

We have seen an unprecedented debacle on the Nasdaq. We have witnessed a year of a profits depression -- not a recession, a depression -- with no quick end in sight for many sectors. Why, then, is the price-to-earnings multiple of the Dow 30 about 26, roughly twice the historic norm for periods of prosperity? Why is the P/E multiple of the S&P 500 still so high after the tech bloodletting?

Why are stocks yielding on an earnings basis about two-thirds of what bonds yield when the usual ratio is far closer to identical? Why do people want stocks so much when the dividend yield on stocks is below 2%, or less than a third of what corporate bonds are paying? ...