The S&P 500's P/E ratio is 10, correct?
No, not even close, and here is data direct from S&P to back that up.
According to Standard and Poor's the current P/E ratio using the historically relevant earnings model, as-reported earnings, is 40 with the S&P 500 at 700. That's using the Q4 data with 98% of companies reporting.
If you use operating earnings, the current P/E is 14, 40% higher than 10.
Even if you want to cheat and use operating earnings or Q3 earnings, just take another look at that earnings report and notice what the projected P/E ratios are. Now ask yourself how accurate earnings estimates have been and how accurate they are likely to be.
Both operating and reported earnings have gone negative in Q4 and are likely to stay that way for some time. In the past year, earnings estimates have had to be corrected downward on a week-by-week basis, last quarter falling from +50% at the start of the quarter to -40% as actual earnings came out.
So now you know the truth and you know you are either being lied to or the people who are supposed to be keeping you informed are incompetent; take your pick.
Disclosure: Short the S&P 500 via SDS.