Overvalued P/E starts at 20 Fair value P/E is at 15 Undervalued P/E is at 10 Even with the sharp drop in the S&P 500, it is still overvalued. Based upon S&P 500 Q3 GAAP earnings (96% of companies reporting) the P/E is 16.3. For the S&P 500 to have an undervalued P/E of 10, prices would have to drop to 514. No bear market has ever ended with the market at fair value (it was always lower). Considering the severity of the underlying reasons for the current bear market, there is no reason to think that this time will be any different. Is the bottom in yet? No way.