From Dow Jones & Company:

The U.S. stock market is currently a better value than it was at the bull-market peak in early January 2022, with the stock market trading at or slightly above those levels. Initially, this seemed promising as the bear market was expected to work off the valuation extremes of the previous bull market. However, while the current stock market isn’t as overvalued as it was in 2022, it still remains more overvalued than at almost any other time in U.S. history. The market currently has a higher price/earnings ratio based on trailing-12-months as-reported earnings compared to January 2022.

Even though there has been an improvement in some indicators, such as the CAPE ratio falling from 41.1 to 32.6, it still remains higher than 90.1% of monthly readings since 1881. Additionally, a model that uses the CAPE ratio to predict the S&P 500’s inflation-adjusted return over the subsequent ten years only forecasts a 0.7% annualized return, compared to a loss of 2.3% annualized in January 2022. However, it is important to note that valuation indicators have relatively little ability to predict the stock market’s short-term movements, so the potential for decent returns over the next several months or quarters still exists.



Read more: How pricey is the market? Just compare it with the January 2022 bull-market high.