The S&P 500’s rally has stalled since August — yet despite the slowdown, stocks look anything but cheap these days.
“It’s nearly impossible to be bullish on the market capitalization weighted S&P 500 on valuation – it trades expensive on 19 of 20 measures we track,” wrote Bank of America equity & quant strategist Jill Carey Hall in a recent note to clients. “Our Dividend Discount Model Equity Risk Premium is the only measure on which the US market trades inexpensive, aligned with our view that the risk premium for stocks may be too high and the so-called “risk-free” 10 year T-bond rate may be too low.”
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