Sorry for the “can’t read if I don’t pay issue”.
My excerpt did include the 8 items that many experts think represent an overvalued stock market.
They were:
“Household Equity Allocation”
“Price/sales ratio”
“Price/book ratio”
“Q Ratio”
“Buffet Indicator”
“Dividend Yield”
“Shiller P/E (CAPE)”
“Price Earnings ratio”
Each of those factors as they are today were compared with their histories going back to 1954. They are all found by those experts to be in bubble or near bubble territories.
They do admit that yes. something not now forseen could change any or each of those factors, and while that which is unforseen could be positive for any one or all of them, the history of that happening - if history is any guide - is not good.
THAT prediction could cause some to panic, while a more sound approach would be to scale down expectations of U.S. stocks for the long term, and diversify investment holdings to have less emphasis than present on U.S. stocks. In other words, don’t run out in the street and yell the sky is falling but do prepare for rain.
Thanks. Sorry that I missed the list you had thoughtfully included in your initial post.
Prices are high for stocks, and that is going to have to be unwound over time. How much, how long, and how soon are all subject to other variables. The least painful way is to grow, grow, grow.
Part of the price rise was built up over a few years of money pumping and extraordinarily low interest rates and inflation. Part of it was the 25% forward-looking run up when Trump policies came in.
Bottom line: It would take spectacular growth to normalize P/Es while still getting a good return on stocks - but that kind of growth is actually possible with low taxes (a structural break with CAPE data - tax cuts are dollar for dollar boosts to earnings), deregulation, exploding energy production, and trade adjustments.