Gyroscopic Investing

I don't know what you guys use for P/E ratios, but VTI's P/E of the last 4 quarters is 6.86, which is an implied "earnings yield" (I like this because then you can compare it somewhat to interest rates) of 14.6%.

Further it's dividend yield is 2.1%, about that of the 10-year treasury right now.

How do you guys tend to look at this in terms of what the market's offering... I understand that neither P/E nor dividend yields are "promises to pay," neither interest nor a return of your investment at the end of a given period.

So I know it's apples to oranges a bit...

But what do you folks think about what this says about our investing options at this point?  About interest rates... (30-years at 3.4%?).

I guess I'm not so much concerned with current net income of domestic corporations, but instead their ability to continue to make a profit if aggregate demand drops due to continued economic problems.  How much flexibility do they have to pivot in the wake of a 10%-15% decrease in demand?  How quickly may they adjust their dividend payout.

http://www.google.com/finance?q=vti#

IMO dividend yield is to intertwined with tax policy for it to be a meaningful metric.  Take a look at why Berkshire Hathaway and Google have pledged to never pay dividends.  The short answer is that they believe it's better for their shareholders to be paid through capital appreciation than dividends since the former is more tax-efficient.  Decisions like these skew the market's dividend yield.

Honestly, part of the reason I use the PP is that I don't need to pay attention to things like P/E ratios.  So I don't have much else to add.