What is GULP? Reasoning from 200 Years Ago is Still Valid Now

How to Value Companies

We value companies based on our estimate of earnings per share, usually two or three years out. I don’t look six months to a year out because too many other people are doing that, and I don’t look four or five years out because there are too many uncertainties in looking out that far. Then it’s a question of putting a multiple on those projected earnings. Over the past forty years the stock market has sold, on average, at about 15x earnings, so I conclude that an average company is worth 15x earnings. Above average companies, of course, should be worth more than 15x.
Source: http://www.valueinvestorinsight.com/