S&P 500 Valuation Metrics Current valuation metrics suggest the S&P 500 is experiencing high valuations, with multiple indicators pointing to potential overvaluation, warranting caution among investors. Image: BofA US Equity & Quant Strategy
S&P 500 Valuation – Shiller’s Cyclically-Adjusted Price-To-Earnings (CAPE) Ratio The Shiller CAPE ratio is elevated relative to history. While valuation is not a reliable timing tool, investors should be mindful of the potential for lower future returns when valuations remain high for an extended period. Image: Morgan Stanley Research
S&P 500 Valuation – Real Market Capitalization to Real GDP Ratio The inflation-adjusted market capitalization to GDP ratio is a valuable tool to evaluate the U.S. stock market’s valuation. The high current ratio implies a potential overvaluation. Image: Real Investment Advice
S&P 500 Valuations According to a macro model developed by Goldman Sachs, U.S. equities are suggested to be overvalued by 40%, raising concerns among market participants about long-term sustainability and future market corrections. Image: Goldman Sachs Global Investment Research
S&P 500 Valuation Matrix (12-Month Forward EPS and P/E Multiple) According to Morgan Stanley, U.S. equity market gains in 2024 may stall due to high forward multiples and ambitious earnings forecasts for the next 12 months. Image: Morgan Stanley Wealth Management
S&P 500 Valuations While high valuations can persist, investors should be aware of the potential for lower future returns when valuations remain elevated for an extended period. Image: Topdown Charts
S&P 500 Valuations – Combined P/E Ratio and Equity Risk Premium Given the S&P 500’s high P/E ratio, should investors be cautious about U.S. equities? And do they receive adequate compensation for the risk associated with owning U.S. equities rather than bonds? Image: Topdown Charts
S&P 500 Valuation and Buffett Indicator – Inflation-Adjusted Market Capitalization to GDP Ratio Buffett’s market indicator remains very elevated despite the market sell-off. Image: Real Investment Advice
S&P 500 Valuation Multiples S&P 500 valuation multiples remain stretched and well above averages. Image: Goldman Sachs Global Investment Research
Total Real Return of $1000 Investment with Dollar Cost Average vs. S&P 500 Valuations Diversification does not always work and valuations matter. The S&P 500 can take a very long time to recover from a bear market. Image: Real Investment Advice