Greg Mankiw's Blog: Expected Return
The bottom line: Right now, the expected inflation-adjusted return is about 6 percent.
This ratio can be different from industry and industry, so if you want become a value investor like Buffet you have to looking into more then just ratio but go beyond and dissect whole thing; security analysis. Cheap mean is not all good one. When price is low, you wonder why and then looking into company performance, and its management or customers. Also bit of intuition playing role; feeling things, figuring out which is good or not. I think this come from experience also lots of economic stuff around traps, read lots of newspapers blogs picked everyone brains if you can, good thing about this information age, people wonderfully generously let their brain; saying please pick my brain for free! but there ain't no such thing as a free lunch!
