I know there is value out there in the market, but as a whole (the sp500) the market is still overvalued compared to historical averages. Lately, I’ve found myself thinking that it seems bizarre how much of the market is trading at high multiples, but when you think about it, they are just ratios being compared to long term averages. So from my understanding (I’m 22 and don’t think I’m anywhere near an expert) there is no indicator saying for a fact the market is overvalued. Again we are just comparing rations like PE, P/S, P/B, etc. This got me thinking who’s to say we are overvalued? What if the new “norm” or long term average is, for example, a pe of 20 rather than around 14 or 15 for the overall market?
I’m studying economics in college and I know a lot of the ratios are pretty subjective. This is just an open ended question and just looking to discuss. Again, my level of expertise is pretty low imo so I’m not claiming this is a fact and feel free to correct me if I’m missing something key.
Leave a Reply