Y? Series - Why Are Stocks Considered Expensive?

February 7, 2020

A variety of ratios and indicators can be pointed to in order to make that statement: “Stocks are expensive.” However, in the end, you need to remember that you always need a reference point to measure the value of something.

 

Frequently, the price to earnings ratio (PE) is consulted. Considering the fact that the sum of stock valuations in the market reflect the sum of an economy’s production, to some degree, the following chart is one worth consulting from time to time.

 

Source: Haver Analytics, Goldman Sachs Global Investment Research. As of Dec. 31, 2019

 

The chart shows that taking the total market cap of the US stock market and comparing it to the US Gross Domestic Product, the measure of total economic production, stocks are now more expensive than they were at the peak of the dot.com bubble.

Share on Facebook
Please reload

Featured Posts

GG Special Report: Lebanon Crisis - A Cautionary Tale

January 13, 2020

1/6
Please reload

Recent Posts
Please reload

Subscribe

Subscribe to this Newsletter

I have read and accepted the

Legal Information

Follow Us
  • Global Gold Facebook