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Are Stocks Overvalued?

“The golden age of investing is over.” — Robert Shiller, Yale University

Is the stock market overvalued? Many pundits, including Robert Shiller and Mark Hulbert, think so, based on traditional measures such as the price-earnings (P/E) ratio, dividend yield, price/book, price/sales, CAPE and the q-ratio.

CAPE is Yale Professor Robert Shiller’s favorite index that measures the price-earnings ratio of the U.S. stock market over a 10-year period. It shows stocks almost as expensive as the late 1990s and 2007. In both cases, stocks collapsed.

The q-ratio compares the market capitalization of stocks (such as the S&P 500) with corporate earnings. The interpretation is not unlike the CAPE Index — stocks are expensive.

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Investment expert Dr. Skousen discusses why stocks may not be overvalued, even as the market has repeatedly hit record highs.

archive

Are Stocks Overvalued?

Investment expert Dr. Skousen discusses why stocks may not be overvalued, even as the market has repeatedly hit record highs.

??The golden age of investing is over.? — Robert Shiller, Yale University

Is the stock market overvalued? Many pundits, including Robert Shiller and Mark Hulbert, think so, based on traditional measures such as the price-earnings (P/E) ratio, dividend yield, price/book, price/sales, CAPE and the q-ratio.

CAPE is Yale Professor Robert Shiller??s favorite index that measures the price-earnings ratio of the U.S. stock market over a 10-year period. It shows stocks almost as expensive as the late 1990s and 2007. In both cases, stocks collapsed.

The q-ratio compares the market capitalization of stocks (such as the S&P 500) with corporate earnings. The interpretation is not unlike the CAPE Index — stocks are expensive.

Click here to read the rest of this article, “Are Stocks Overvalued?

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Sign up to the Human Events newsletter

Written By

Mark Skousen is a college professor, prolific author and world-renowned speaker. He??s made his unique sense of market and investment trends known and respected in the financial world. With a Ph.D. in economics and a focus on the principles of free-market capitalism and ??Austrian? economics, Mark Skousen has often gone contrary to the crowd in his investment choices and economic predictions ?? and has often been proved right.

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