the S&P could be higher, which would mean the big drop could come in 2010 just when everyone thinks the worst is behind us. never underestimate stupidity. if this current suckers rally gets some legs and we survive earnings in 3Q, it could mean a nice rally before 2010.
royal bank of scotland got it wrong. it wasn't inflationary pressures that handcuffed central banks, it was that no part of the economy could absorb more debt to help drive growth. liquidity bubble, too much hot money chasing too few hot assets creating misallocations of capital. inflation bets were the right choices leading up to their call on the S&P, not after
You should ask the question : WHO decides whether P/E of 8,10,15 or 19 is "appropriate" ? Even forward P/E ratios have so many flaws... But there is some good news out there : http://www.tickersense.typepad.com/
I agree with the gist of what you say. The study of history, though of some value, does not confer as much predictive value and significance for current and future events as most believe. It is an overbought commodity, trading entirely too high.