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Greenwald: Opportunity Even When the Market's Not Cheap

Index investors may be cautious when the Shiller P/E is high, but specific and extraordinary opportunities can still be had, says the Columbia professor and First Eagle director of research.

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Ryan Leggio: One metric that we look at, and other value investors look at, to get a general gauge of how the market is valued, is Shiller's Cyclically Adjusted P/E Ratio. Can you give us your thoughts on how relevant that metric would be for value investors, generally?

Bruce Greenwald: If you are going to go into the market indiscriminately--if you're an equity fund that has to invest only in equities--then you might want to look at that. But the thing is that that tells a gross general story.

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Ryan Leggio does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.