I follow the big picture blog, and I’m a big fan of Barry Ritholz. Some people may call him pessimistic, but I think he’s very realistic, and he was totally accurate in calling the latest stock market crash.

He had a post today about S&P earnings estimates. Ive been following 2009 S&P earnings estimates for a few months, and back in October/November, I remember a lot of analysts saying 2009 earnings estimates were coming down from $90 at the beginning of 2008 to $78 (according to Barry’s data, these numbers were much lower to most analysts at this time, but the local media was focused on early predictions, maybe to make things seem cheaper, and therefore, a better opportunity to buy) .

At the time, that made 2009 P/E ratios of the S&P look pretty cheap on a forward PE basis (around 10-12x using 900 as the S&P value, which it was for a good portion of the month but also dropped as low as 758).

But based on Barry’s recent post, earnings estimates are down to $42. That means we’re in pretty expensive territory (about 22.3x forward P/E). With historical averages closer to 15x, then things certainly don’t seem cheap, especially if the economy gets worse and the economic stimulus doesn’t do much.

I’ll be on the sidelines for a little longer!