Stocks Look Cheap According to Bespoke Investment Group

Hmm, this rally might just be returning to the mean which in this case is higher from here. The S&P 500 is currently trading at 1316 for purposes of comparison.

To start 2012, the benchmark had an earnings multiple of 13, the lowest since 1990 and below the 80-year average of 15, according to Bespoke. It would take a move back to 1,484 to get the benchmark back to this long-term mean P/E. 

The price-to-book ratio is 2.05, below the average since the late 1970s of 2.43. To get back to that average P/B, the benchmark would need to increase to 1,491.

One more valuation—dividend yield—points to above 1,400, argue the two strategists.

“At the end of 2011, the S&P 500 was yielding 13 percent more than the 10-Year US Treasury,” wrote Hickey and Walters. “Outside of the credit crisis, the last time the S&P 500 yielded more than the 10-Year Treasury was before 1960."