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- Yes. According to our research, the stock market is 19% overvalued. The current Shiller PE of 31 is 19% above the 200-month moving average of 26. This is above the historic median but way off the peaks of 40 and 44 over the last 100 years.
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The S&P 500 index has risen 7% year to date.
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- Key Overvaluation Indicator at Highest Level Since The Dotcom Bubble
- Tech Sector and Risk Appetite
- Unique Market Conditions and Inflation Woes
- Historically, The Stock Market Has Served Main Street in The Long Run
One measure often used by economists to predict a potential asset price bubble is the cyclically adjusted price-to-earnings (CAPE) ratio, developed by economist and Yale University professor Robert Shiller. The measure looks at firms' inflation-adjusted real earnings per share over a 10-year period to indicate possible over- or under-valuations. It...
Many market watchers, for example, have been ringing alarm bells surrounding the sky-high growth of Tesla stock in recent years -- arguing that its value does not align with its production output and fundamentals. On paper, the argument seems valid: Tesla's market cap, some $775 billion, is larger than the next five largest automakers combined. Yet...
When COVID-19 upended the economy in the spring of 2020, unemployment levels in the U.S. reached highs not seen since the Great Depression as lockdown orders forced businesses to shutter. In the midst of the crisis, the stock market fell sharply in March (when it had been at record highs) -- but then rallied back to reach new highs within months. M...
Retail investors have pumped billions into the stock market in 2021, with some economists linking this to the rise of investing apps and pandemic stimulus funds that were distributed at the height of stay-at-home orders. Ultimately, Stern's Schnaebl says it is hard to tell until after the fact if stocks are overvalued and a crash looms. "There can ...
- Catherine Thorbecke
- 2 min
Mar 8, 2024 · A ratio higher than 1.0 indicates a stock is overvalued, or expensive, while a ratio under 1.0 indicates that it’s undervalued, or cheap. Right now, the P/FV ratio of the US stock market is...
Sep 20, 2021 · Based on history, the answer is yes. Based on current interest rates, the market looks reasonably priced—not cheap, but certainly within a reasonable range. Finally, based on market behavior,...
Aug 21, 2020 · The stock market capitalization-to-GDP indicator, also known as the "Buffett indicator," looks at the value of the stock market relative to GDP. In a 2001 interview with Fortune, Buffett called...
Feb 27, 2024 · Might there be a way to wriggle out from underneath the bearish message of the stock market's overvaluation? Tantalizing as this possibility might be, it does seem remote.
Mar 1, 2023 · Based on the current value of the CAPE ratio, many argue that the U.S. stock market is very overvalued. Looking at the CAPE ratio going back to the 1880s shows that the CAPE ratio is, indeed,...
