Robert Shiller and Jeremy Siegel were on CNBC this past week debating stock market valuation. Shiller makes the case that the market is overvalued based on the historically high PE10 ratio which I wrote about several months ago.
Siegel is more bullish. He argues that valuations are attractive based on the current PE ratio, and he believes the current equity risk premium is quite high. In other words, he believes the expected return on stocks is high relative to the expected return on bonds.
What do you think? Do you agree with Siegel or Shiller?