Are Stocks Cheap?by William R. Cline | October 31st, 2008 | 02:23 pm
Seventy-nine years ago the crash of Black Monday and Black Tuesday on October 28–29, 1929, cut stock prices by 23 percent. Economists now generally consider the misguided monetary and fiscal policies that followed (tightening on both counts) the cause of the Great Depression, not the stock market crash (which eventually cut stock prices 89 percent from their peak). Hopefully, we are not embarking at present on a controlled experiment to see whether they have been right. There could be a significant market recovery by end-2009 if mainstream earnings projections are achieved and price-earnings ratios return to more normal levels.