{"id":390117,"date":"2010-03-04T17:14:21","date_gmt":"2010-03-04T22:14:21","guid":{"rendered":"http:\/\/www.businessinsider.com\/long-term-pe-ratios-make-it-clear-that-the-market-is-about-26-overvalued-2010-3"},"modified":"2010-03-04T17:14:21","modified_gmt":"2010-03-04T22:14:21","slug":"heres-why-the-market-is-about-26-overvalued","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/390117","title":{"rendered":"Here’s Why The Market Is About 26% Overvalued"},"content":{"rendered":"

(This guest post originally appeared at the author’s blog<\/a>)<\/em><\/p>\n

The latest data from Robert Shiller’s 10 year PE ratio shows the market c<\/a>urrently at a 20.64 multiple.  In his morning note, David Rosenberg noted that this is 26% higher than the long-run average:<\/p>\n

“If there was an impediment, in addition to a murky economic outlook, it is valuation. There were revisions to the Shiller valuation data and the latest reading<\/a> on the normalized real P\/E multiple is at 20.64x, up from the 20.0x in February and 20.5x in January. The long-run trend is at 16.36x, suggesting that the S&P is currently overvalued by 26%.”<\/p>\n

\"pe1<\/p>\n

This chart provides little of utility in and of itself, but combined with a longer-term look<\/a> at stock prices it raises some interesting thoughts.  As a student<\/a> of and believer of mean reversion, I just can’t help but wonder if the recent recovery in stocks is nothing more than a brief respite in the long-term “chop” that has become a defining characteristic of equity prices over the last 10 years.<\/p>\n

\"20100226<\/p>\n

Source: Chartoftheday<\/a>, Shiller Econ & Gluskin Sheff<\/p>\n

Read more market analysis at<\/strong> The Pragmatic Capitalist ><\/strong><\/a><\/p>\n

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