FYI: The U.S. stock market’s decline in the fourth-quarter of 2018 barely made a dent in equities’ severe overvaluation.
This no doubt will disappoint bullish investors who are hoping that the decline, painful as it otherwise was, might have at least eliminated what up until now had become one of the biggest thorns in their sides: Stocks had been more richly valued than at almost any bull-market top in U.S. history.
They still are.
To be sure, stocks at the bottom of the correction (or bear market, depending on who’s counting) were less overvalued than they were at the market’s all-time high in late September. But it’s a measure of stocks’ previous overvaluation that the market can decline by 15% to 20% (or more) and still be wildly overvalued.
This is the unavoidable conclusion I reached when focusing on six widely used valuation indicators. As you can see from the accompanying chart, the message of those indicators is that the U.S. market in January 2019 is more overvalued than it was at between 67% and 95% of the three-dozen market tops that appear on a bull market calendar maintained by Ned Davis Research.
Regards,
Ted
https://www.marketwatch.com/story/6-reasons-why-stocks-are-still-overvalued-even-after-this-recent-correction-2019-01-14/print
