Doug Short has updated his chart. Leonhardt thinks stocks are finally starting to look affordable:
...does this mean stocks are finished falling? No.
In the other two great bear markets of the past century, in the 1930s and the 1980s, the p-e ratio ultimately dropped to about 6 or 7. To get to that level now, the S&P 500 would have to drop below 400, from the current 701, and the Dow Jones industrial average would need to be below 4,000. So stocks may well continue to fall. They may even still fall a fair amount.
But long-term investors and that describes most of us should start to feel perfectly fine about buying stocks. Investors who bought in the late 1930s or late 1970s, when the p-e was also around 12, had a rough ride. But they did quite nicely if they held their stocks for a decade or more.