Are stock prices too high?

 I have written about the Schiller Index previously but essentially it is  cyclically adjusted price earnings ratio (named after the Nobel prize winner) which is calculated by dividing stock prices by average earnings over the prior decade, with adjustment for inflation. This index in April was close to 27 with the long term average being 16.6 since the late 1800's. So, if this Index is high, like now, this portends that fund returns are going to much lower. Anway, there has been some resistance to this concept by people who think this concept is flawed because the market over a 100 years ago was nothing like it is today. In addition, the earnings yield (reverse of PE ratio or E/P) normally tracks the 10 year bond yield. So, Reynolds from the CATO Institute points out that the E/P from 1970 to 2014 was 6.62 which closely follows the ten year bond yield of 6.77. He is suggesting that the current gap between E/P and the ten year bond yield of  2.7 will be followed by bond yields rising.