According to our proprietary models, the median fair-value for the S&P 500 is 1,120 (with a range of 1,000 to 1,200) suggesting the market is overvalued by over 10%. The fair-value line has actually been creeping upwards as earnings/revisions have recently improved.
Another metric we watch is the Shiller P/E ratio (uses cyclically-adjusted earnings), which moved up again to 21.9x (the highest since June 2006). Using this metric, the market is overvalued by over 30%.
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